NEW YORK ( TheStreet) -- Energy Services of America Corporation (AMEX: ESA) 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, poor profit margins and generally disappointing historical performance in the stock itself. 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 Energy Equipment & Services industry. The net income has significantly decreased by 117.7% when compared to the same quarter one year ago, falling from $4.10 million to -$0.73 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 Energy Equipment & Services industry and the overall market, ENERGY SERVICES OF AMERICA's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for ENERGY SERVICES OF AMERICA is currently extremely low, coming in at 8.40%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -1.60% is significantly below that of the industry average.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 28.74%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 117.64% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- ENERGY SERVICES OF AMERICA 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 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, ENERGY SERVICES OF AMERICA turned its bottom line around by earning $0.48 versus -$0.49 in the prior year.