NEW YORK (
-- KIT Digital
) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.
Highlights from the ratings report include:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Internet Software & Services industry. The net income has significantly decreased by 99.0% when compared to the same quarter one year ago, falling from -$12.50 million to -$24.88 million.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Internet Software & Services industry and the overall market, KIT DIGITAL INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has decreased to -$11.79 million or 30.00% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 65.25%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 55.88% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- KIT DIGITAL INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, KIT DIGITAL INC continued to lose money by earning -$0.71 versus -$2.00 in the prior year. For the next year, the market is expecting a contraction of 36.6% in earnings (-$0.97 versus -$0.71).
KIT digital, Inc., through its subsidiaries, provides end-to-end video asset management software and related services to enterprise clients. KIT Digital has a market cap of $198 million and is part of the
industry. Shares are up 45% year to date as of the close of trading on Thursday.
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-- Written by a member of TheStreet Ratings Staff