NEW YORK ( TheStreet) -- WCA Waste Corporation (Nasdaq: WCAA) 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 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 Commercial Services & Supplies industry. The net income has significantly decreased by 241.5% when compared to the same quarter one year ago, falling from $1.32 million to -$1.87 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 Commercial Services & Supplies industry and the overall market, WCA WASTE CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for WCA WASTE CORP is currently lower than what is desirable, coming in at 26.80%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -2.60% trails that of the industry average.
- Net operating cash flow has decreased to $7.17 million or 11.03% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, WCA WASTE CORP has marginally lower results.
- Currently the debt-to-equity ratio of 1.58 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, WCAA's quick ratio is somewhat strong at 1.16, demonstrating the ability to handle short-term liquidity needs.