NEW YORK ( TheStreet) -- Value Line (Nasdaq: VALU) 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, poor profit margins and generally disappointing historical performance in the stock itself. Highlights from the ratings report include:
- The revenue fell significantly faster than the industry average of 17.5%. Since the same quarter one year prior, revenues fell by 31.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- The company, on the basis of net income growth from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Media industry average. The net income increased by 12.9% when compared to the same quarter one year prior, going from $2.45 million to $2.76 million.
- VALU'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 31.14%, 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.
- The gross profit margin for VALUE LINE INC is currently extremely low, coming in at 14.20%. It has decreased from the same quarter the previous year. Despite the weak results of the gross profit margin, the net profit margin of 29.00% has significantly outperformed against the industry average.
- Net operating cash flow has significantly decreased to $3.34 million or 76.17% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.