NEW YORK ( TheStreet) -- Exceed Company (Nasdaq: EDS) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself. Highlights from the ratings report include:
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Textiles, Apparel & Luxury Goods industry average. The net income increased by 49.0% when compared to the same quarter one year prior, rising from $11.37 million to $16.94 million.
- EXCEED CO LTD has improved earnings per share by 30.8% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, EXCEED CO LTD increased its bottom line by earning $1.70 versus $1.24 in the prior year. For the next year, the market is expecting a contraction of 5.9% in earnings ($1.60 versus $1.70).
- In its most recent trading session, EDS 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 $27.80 million or 36.44% when compared to the same quarter last year. Despite a decrease in cash flow of 36.44%, EXCEED CO LTD is in line with the industry average cash flow growth rate of -44.63%.
- The gross profit margin for EXCEED CO LTD is currently lower than what is desirable, coming in at 31.00%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 14.80% is above that of the industry average.