NEW YORK ( TheStreet) -- Pure Cycle Corporation (Nasdaq: PCYO) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its weak operating cash flow and deteriorating net income.

Highlights from the ratings report include:
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
  • PURECYCLE CORP's earnings per share declined by 14.3% in the most recent quarter compared to the same quarter a year ago. Stable Earnings per share over the past year indicate the company has sound management over its earnings and share float. During the past fiscal year, PURECYCLE CORP continued to lose money by earning -$0.27 versus -$0.28 in the prior year.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Water Utilities industry and the overall market, PURECYCLE CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The change in net income from the same quarter one year ago has exceeded that of the Water Utilities industry average, but is less than that of the S&P 500. The net income has decreased by 17.6% when compared to the same quarter one year ago, dropping from -$1.51 million to -$1.78 million.
  • Net operating cash flow has decreased to -$0.62 million or 19.00% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

Pure Cycle Corporation, a vertically integrated water and wastewater service provider, engages in the design, construction, operation, and maintenance of water and wastewater systems in the Denver metropolitan area. Pure Cycle has a market cap of $72.4 million and is part of the industrial goods sector and materials & construction industry. Shares are down 14.9% year to date as of the close of trading on Thursday.

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