NEW YORK ( TheStreet) -- Global Ship Lease (NYSE: GSL) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its generally weak debt management and disappointing return on equity. Highlights from the ratings report include:
- GSL, with its decline in revenue, underperformed when compared the industry average of 16.8%. Since the same quarter one year prior, revenues slightly dropped by 0.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- GLOBAL SHIP LEASE INC reported significant earnings per share improvement 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, GLOBAL SHIP LEASE INC swung to a loss, reporting -$0.09 versus $0.90 in the prior year.
- This stock has increased by 116.66% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
- 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 Marine industry and the overall market on the basis of return on equity, GLOBAL SHIP LEASE INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
- The debt-to-equity ratio of 1.35 is relatively high when compared with the industry average, suggesting a need for better debt level management. To add to this, GSL has a quick ratio of 0.59, this demonstrates the lack of ability of the company to cover short-term liquidity needs.