NEW YORK ( TheStreet) -- Sone Corporation (Nasdaq: SONE) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share. Highlights from the ratings report include:
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Software industry and the overall market, Sone CORP's return on equity significantly trails that of both the industry average and 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 143.7% when compared to the same quarter one year ago, falling from $9.94 million to -$4.35 million.
- SONE, with its decline in revenue, slightly underperformed the industry average of 7.2%. Since the same quarter one year prior, revenues fell by 11.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Net operating cash flow has significantly increased by 458.87% to $11.18 million when compared to the same quarter last year. In addition, Sone CORP has also vastly surpassed the industry average cash flow growth rate of -23.97%.
- SONE's debt-to-equity ratio is very low at 0.02 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, SONE has a quick ratio of 1.54, which demonstrates the ability of the company to cover short-term liquidity needs.