NEW YORK (
-- Rosetta Stone
) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.
Highlights from the ratings report include:
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 48.66%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 60.34% 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.
- Net operating cash flow has decreased to $15.07 million or 39.42% 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.
- 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. In comparison to the other companies in the Software industry and the overall market, ROSETTA STONE INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- 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 Software industry. The net income has significantly decreased by 59.2% when compared to the same quarter one year ago, falling from $12.16 million to $4.96 million.
- ROSETTA STONE 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. Stable earnings per share over the past year indicate the company has managed its earnings and share float. We anticipate this stability to falter in the coming year and, in turn, the company to deliver lower earnings per share than prior full year. During the past fiscal year, ROSETTA STONE INC reported lower earnings of $0.62 versus $0.63 in the prior year. For the next year, the market is expecting a contraction of 96.8% in earnings ($0.02 versus $0.62).
Rosetta Stone Inc. provides technology-based language learning solutions worldwide. The company develops, markets, and sells language learning solutions, such as software, online services, and audio practice tools primarily under the Rosetta Stone brand name. The company has a P/E ratio of 21.7, equal to the average computer software & services industry P/E ratio and above the S&P 500 P/E ratio of 16.7. Rosetta Stone has a market cap of $283.2 million and is part of the
industry. Shares are down 36.2% year to date as of the close of trading on Monday.
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