NEW YORK ( TheStreet) -- Pain Therapeutics (Nasdaq: PTIE) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity 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 significantly exceeded that of the S&P 500 and the Pharmaceuticals industry. The net income increased by 79.7% when compared to the same quarter one year prior, rising from -$1.02 million to -$0.21 million.
- PAIN THERAPEUTICS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, PAIN THERAPEUTICS INC reported poor results of -$0.27 versus -$0.08 in the prior year. This year, the market expects an improvement in earnings (-$0.04 versus -$0.27).
- PTIE, with its decline in revenue, slightly underperformed the industry average of 0.3%. Since the same quarter one year prior, revenues slightly dropped by 0.4%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- PTIE's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 30.40%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Pharmaceuticals industry and the overall market, PAIN THERAPEUTICS INC's return on equity significantly trails that of both the industry average and the S&P 500.