NEW YORK ( TheStreet) -- Local.com Corporation (Nasdaq: LOCM) 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, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share. Highlights from the ratings report include:
- The revenue fell significantly faster than the industry average of 26.5%. Since the same quarter one year prior, revenues fell by 32.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- LOCAL.COM CORP 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. 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, LOCAL.COM CORP turned its bottom line around by earning $0.25 versus -$0.43 in the prior year. For the next year, the market is expecting a contraction of 150.0% in earnings (-$0.13 versus $0.25).
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 36.95%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 457.14% compared to the year-earlier 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.
- 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. Compared to other companies in the Internet Software & Services industry and the overall market, LOCAL.COM CORP'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 539.3% when compared to the same quarter one year ago, falling from $1.23 million to -$5.40 million.