NEW YORK ( TheStreet) -- Sypris Solutions (Nasdaq: SYPR) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow, poor profit margins and feeble growth in its earnings per share. Highlights from the ratings report include:
- SYPRIS SOLUTIONS 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 reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, SYPRIS SOLUTIONS INC reported poor results of -$0.52 versus -$0.30 in the prior year. This year, the market expects an improvement in earnings ($0.07 versus -$0.52).
- The gross profit margin for SYPRIS SOLUTIONS INC is rather low; currently it is at 16.60%. Regardless of SYPR's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -2.40% trails the industry average.
- Net operating cash flow has decreased to $1.92 million or 35.20% 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.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Aerospace & Defense industry and the overall market, SYPRIS SOLUTIONS INC'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 Aerospace & Defense industry. The net income has significantly decreased by 107.2% when compared to the same quarter one year ago, falling from $22.58 million to -$1.63 million.