NEW YORK ( TheStreet) -- Limelight Networks (Nasdaq: LLNW) 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, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from the ratings report include:
  • 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 515.2% when compared to the same quarter one year ago, falling from -$2.27 million to -$13.94 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Internet Software & Services industry and the overall market, LIMELIGHT NETWORKS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to $2.05 million or 62.73% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 45.84%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 500.00% 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.
  • LIMELIGHT NETWORKS 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 year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, LIMELIGHT NETWORKS INC swung to a loss, reporting -$0.21 versus $0.41 in the prior year. This year, the market expects an improvement in earnings (-$0.03 versus -$0.21).

Limelight Networks, Inc. provides content delivery network services in North America, Europe, the Middle East, Africa, and the Asia Pacific. Limelight has a market cap of $370.1 million and is part of the services sector and diversified services industry. Shares are down 64.2% year to date as of the close of trading on Wednesday.

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