NEW YORK ( TheStreet) -- Accuray (Nasdaq: ARAY) 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, 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 Health Care Equipment & Supplies industry. The net income has significantly decreased by 597.6% when compared to the same quarter one year ago, falling from $5.02 million to -$24.98 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Health Care Equipment & Supplies industry and the overall market, ACCURAY INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The share price of ACCURAY INC has not done very well: it is down 18.98% 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.
  • ACCURAY 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 two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, ACCURAY INC swung to a loss, reporting -$0.43 versus $0.04 in the prior year. This year, the market expects an improvement in earnings (-$0.30 versus -$0.43).
  • 42.80% is the gross profit margin for ACCURAY INC which we consider to be strong. Regardless of ARAY's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ARAY's net profit margin of -33.20% significantly underperformed when compared to the industry average.

Accuray Incorporated designs, develops, and sells the CyberKnife system, an image-guided robotic radiosurgery system used for the treatment of solid tumors. The company has a P/E ratio of 84.8, equal to the average health services industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Accuray has a market cap of $306.2 million and is part of the health care sector and health services industry. Shares are down 27.3% year to date as of the close of trading on Tuesday.

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