NEW YORK ( TheStreet) -- Image Sensing Systems (Nasdaq: ISNS) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:
  • The share price of IMAGE SENSING SYSTEMS INC has not done very well: it is down 6.69% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
  • Net operating cash flow has significantly decreased to -$2.06 million or 1234.06% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The gross profit margin for IMAGE SENSING SYSTEMS INC is currently very high, coming in at 75.00%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, ISNS's net profit margin of -13.10% significantly underperformed when compared to the industry average.
  • ISNS has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 4.57, which clearly demonstrates the ability to cover short-term cash needs.
  • ISNS's revenue growth trails the industry average of 35.2%. Since the same quarter one year prior, revenues rose by 13.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.

Image Sensing Systems, Inc., a technology company, provides software-based detection solutions for the intelligent transportation systems (ITS) sector and adjacent markets, including security, police, and parking internationally. The company has a P/E ratio of 28.6, above the average computer software & services industry P/E ratio of 18.8 and above the S&P 500 P/E ratio of 16.2. Image Sensing Systems has a market cap of $58.6 million and is part of the technology sector and computer software & services industry. Shares are down 7.8% year to date as of the previous trading day's close.

You can view the full Image Sensing Systems Ratings Report or get investment ideas from our investment research center.
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