NEW YORK ( TheStreet) -- Resource America Inc. CL A (Nasdaq: REXI) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity and generally disappointing historical performance in the stock itself. Highlights from the ratings report include:
- 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 Diversified Financial Services industry and the overall market, RESOURCE AMERICA INC's return on equity significantly trails that of both the industry average and the S&P 500.
- REXI has underperformed the S&P 500 Index, declining 9.22% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- Despite the current debt-to-equity ratio of 1.50, it is still below the industry average, suggesting that this level of debt is acceptable within the Diversified Financial Services industry.
- 46.80% is the gross profit margin for RESOURCE AMERICA INC which we consider to be strong. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -1.50% is in-line with the industry average.
- RESOURCE AMERICA INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. During the past fiscal year, RESOURCE AMERICA INC continued to lose money by earning -$0.73 versus -$0.79 in the prior year.