NEW YORK ( TheStreet) -- DragonWave (Nasdaq: DRWI) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share and unimpressive growth in net income. Highlights from the ratings report include:
- The gross profit margin for DRAGONWAVE INC is rather high; currently it is at 50.80%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -0.20% is in-line with the industry average.
- DRWI, with its very weak revenue results, has greatly underperformed against the industry average of 9.0%. Since the same quarter one year prior, revenues plummeted by 51.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- In its most recent trading session, DRWI 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. Regardless of the rise in share value over the previous year, we feel that the risks involved in investing in this stock do not compensate for any future upside potential.
- 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 Communications Equipment industry. The net income has significantly decreased by 100.4% when compared to the same quarter one year ago, falling from $12.60 million to -$0.05 million.
- DRAGONWAVE 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. For the next year, the market is expecting a contraction of 146.3% in earnings (-$0.33 versus $0.72).