NEW YORK ( TheStreet) -- Authentidate Holding Corporation (Nasdaq: ADAT) has been downgraded by TheStreet Ratings from hold to sell. Among the areas we feel are negative, one of the most important has been an overall disappointing return on equity.

Highlights from the ratings report include:
  • This stock has increased by 101.66% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in ADAT do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
  • Net operating cash flow has increased to -$1.37 million or 19.74% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 4.28%.
  • 38.20% is the gross profit margin for AUTHENTIDATE HOLDING CORP which we consider to be strong. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -228.60% is in-line with the industry average.
  • ADAT has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Despite the fact that ADAT's debt-to-equity ratio is low, the quick ratio, which is currently 0.67, displays a potential problem in covering short-term cash needs.
  • 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 Software industry and the overall market, AUTHENTIDATE HOLDING CORP's return on equity significantly trails that of both the industry average and the S&P 500.

Authentidate Holding Corp. provides secure health information exchange, workflow management services, and telehealth solutions worldwide. The company's software and Web-based services eliminate paper and manual work steps from clinical and administrative processes. Authentidate Holding has a market cap of $55.7 million and is part of the technology sector and internet industry. Shares are up 171.9% year to date as of the close of trading on Tuesday.

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