NEW YORK ( TheStreet) -- Real Goods Solar (Nasdaq: RSOL) 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, weak operating cash flow 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 Electrical Equipment industry. The net income has significantly decreased by 687.7% when compared to the same quarter one year ago, falling from $0.27 million to -$1.58 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 Electrical Equipment industry and the overall market, REAL GOODS SOLAR INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for REAL GOODS SOLAR INC is currently lower than what is desirable, coming in at 27.70%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -7.90% is significantly below that of the industry average.
- Net operating cash flow has significantly decreased to -$1.20 million or 627.63% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The share price of REAL GOODS SOLAR INC has not done very well: it is down 12.24% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when 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.