NEW YORK ( TheStreet) -- Acorn International (NYSE: ATV) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, poor profit margins and generally disappointing historical performance in the stock itself. Highlights from the ratings report include:
- The net income growth from the same quarter one year ago has exceeded that of the Internet & Catalog Retail industry average, but is less than that of the S&P 500. The net income increased by 18.5% when compared to the same quarter one year prior, going from -$10.66 million to -$8.69 million.
- ACORN INTERNATIONAL INC -ADR has improved earnings per share by 13.5% in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past two years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, ACORN INTERNATIONAL INC -ADR reported poor results of -$0.24 versus -$0.12 in the prior year.
- ATV has underperformed the S&P 500 Index, declining 14.16% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- The gross profit margin for ACORN INTERNATIONAL INC -ADR is currently lower than what is desirable, coming in at 29.60%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -12.30% is significantly below that of the industry average.
- 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 & Catalog Retail industry and the overall market, ACORN INTERNATIONAL INC -ADR's return on equity significantly trails that of both the industry average and the S&P 500.