NEW YORK ( TheStreet) -- QuinStreet (Nasdaq: QNST) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself and poor profit margins.

Highlights from the ratings report include:
  • When compared to other companies in the Internet Software & Services industry and the overall market, QUINSTREET INC's return on equity is below that of both the industry average and the S&P 500.
  • Despite currently having a low debt-to-equity ratio of 0.33, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 2.84 is very high and demonstrates very strong liquidity.
  • The gross profit margin for QUINSTREET INC is currently lower than what is desirable, coming in at 34.10%. Regardless of QNST's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, QNST's net profit margin of 5.90% is significantly lower than the same period one year prior.
  • QNST has underperformed the S&P 500 Index, declining 11.89% from its price level of one year ago. 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.

QuinStreet, Inc. operates as an online media and marketing company in the United States and internationally. It provides direct marketing services, including the delivery of leads or paid clicks; and hosted solution and related services for clients in the direct selling industry. The company has a P/E ratio of 19.6, above the average media industry P/E ratio of 19.2 and above the S&P 500 P/E ratio of 17.7. QuinStreet has a market cap of $523.3 million and is part of the services sector and media industry. Shares are down 42.9% year to date as of the close of trading on Tuesday.

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

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