NEW YORK ( TheStreet) -- Online Resources Corporation (Nasdaq: ORCC) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, weak operating cash flow and generally disappointing historical performance in the stock itself. Highlights from the ratings report include:
- The gross profit margin for ONLINE RESOURCES CORP is rather high; currently it is at 59.00%. Regardless of ORCC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ORCC's net profit margin of 1.10% is significantly lower than the same period one year prior.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the IT Services industry and the overall market, ONLINE RESOURCES CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- In its most recent trading session, ORCC has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. 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.
- Net operating cash flow has decreased to $7.72 million or 18.76% 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, 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 IT Services industry. The net income has significantly decreased by 64.9% when compared to the same quarter one year ago, falling from $1.21 million to $0.43 million.