NEW YORK ( TheStreet) -- Saba Software (Nasdaq: SABA) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow and feeble growth in its earnings per share. Highlights from the ratings report include:
- The gross profit margin for SABA SOFTWARE INC is rather high; currently it is at 63.20%. Regardless of SABA's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SABA's net profit margin of -15.90% significantly underperformed when compared to the industry average.
- SABA SOFTWARE INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, SABA SOFTWARE INC swung to a loss, reporting -$0.26 versus $0.09 in the prior year. This year, the market expects an improvement in earnings (-$0.03 versus -$0.26).
- Net operating cash flow has significantly decreased to $2.39 million or 66.72% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- 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 Internet Software & Services industry and the overall market, SABA SOFTWARE INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Internet Software & Services industry. The net income has significantly decreased by 715.0% when compared to the same quarter one year ago, falling from $0.77 million to -$4.76 million.