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NEW YORK (TheStreet) -- Performant Financial (PFMT) - Get Report has been downgraded by TheStreet Ratings from Hold to Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate PERFORMANT FINANCIAL CORP (PFMT) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, poor profit margins, weak operating cash flow, generally high debt management risk and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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 Commercial Services & Supplies industry. The net income has significantly decreased by 103.1% when compared to the same quarter one year ago, falling from $15.45 million to -$0.48 million.
- The gross profit margin for PERFORMANT FINANCIAL CORP is currently extremely low, coming in at 12.28%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -1.20% is significantly below that of the industry average.
- Net operating cash flow has significantly decreased to $4.83 million or 79.35% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The debt-to-equity ratio of 1.24 is relatively high when compared with the industry average, suggesting a need for better debt level management. Regardless of the company's weak debt-to-equity ratio, PFMT has managed to keep a strong quick ratio of 1.92, which demonstrates the ability to cover short-term cash needs.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 26.36%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 103.22% 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.
- You can view the full analysis from the report here: PFMT Ratings Report