NEW YORK (
) 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 and generally disappointing historical performance in the stock itself.
Highlights from the ratings report include:
- SONIC FOUNDRY 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. The company has suffered a declining pattern earnings per share over the past two years. During the past fiscal year, SONIC FOUNDRY INC reported poor results of -$0.07 versus -$0.04 in the prior year.
- 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 422.2% when compared to the same quarter one year ago, falling from $0.13 million to -$0.41 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 Software industry and the overall market, SONIC FOUNDRY INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 36.63%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 466.66% 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.
- The gross profit margin for SONIC FOUNDRY INC is currently very high, coming in at 72.70%. Regardless of SOFO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SOFO's net profit margin of -6.10% significantly underperformed when compared to the industry average.
Sonic Foundry, Inc. provides enterprise solutions and services for the Web communications market worldwide. It offers Web casting, lecture capture, and knowledge management solutions for higher education institutions, businesses, and government agencies. The company has a P/E ratio of 116.9, above the average computer software & services industry P/E ratio of 114.7 and above the S&P 500 P/E ratio of 17.7. Sonic Foundry has a market cap of $35 million and is part of the
industry. Shares are down 32.6% year to date as of the close of trading on Friday.
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