NEW YORK ( TheStreet) -- Green Plains Renewable Energy (Nasdaq: GPRE) 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, generally weak debt management, disappointing return on equity, poor profit margins and feeble growth in its earnings per share. Highlights from the ratings report include:
- GREEN PLAINS RENEWABLE ENRGY's earnings per share declined by 48.1% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, GREEN PLAINS RENEWABLE ENRGY increased its bottom line by earning $1.52 versus $0.78 in the prior year. For the next year, the market is expecting a contraction of 45.4% in earnings ($0.83 versus $1.52).
- The gross profit margin for GREEN PLAINS RENEWABLE ENRGY is currently extremely low, coming in at 4.10%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.60% trails that of the industry average.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, GREEN PLAINS RENEWABLE ENRGY's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- The debt-to-equity ratio of 1.03 is relatively high when compared with the industry average, suggesting a need for better debt level management.
- 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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 42.6% when compared to the same quarter one year ago, falling from $8.68 million to $4.98 million.