NEW YORK ( TheStreet) -- American Pacific Corporation (Nasdaq: APFC) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, disappointing return on equity, weak operating cash flow and generally weak debt management. 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 Chemicals industry. The net income has significantly decreased by 34.8% when compared to the same quarter one year ago, falling from -$4.57 million to -$6.16 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 Chemicals industry and the overall market, AMERICAN PACIFIC CORP'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 -$5.52 million or 165.53% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Currently the debt-to-equity ratio of 1.98 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Even though the debt-to-equity ratio is weak, APFC's quick ratio is somewhat strong at 1.02, demonstrating the ability to handle short-term liquidity needs.
- AMERICAN PACIFIC CORP's earnings per share declined by 34.4% in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past two years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, AMERICAN PACIFIC CORP continued to lose money by earning -$0.43 versus -$0.80 in the prior year.