NEW YORK ( TheStreet) -- World Energy Solutions (Nasdaq: XWES) has been downgraded by TheStreet Ratings from hold to sell. The area that we feel has been the company's primary weakness has been its disappointing return on equity. Highlights from the ratings report include:
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. In comparison to the other companies in the Internet Software & Services industry and the overall market, WORLD ENERGY SOLUTIONS INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- The gross profit margin for WORLD ENERGY SOLUTIONS INC is currently very high, coming in at 86.40%. Regardless of XWES's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, XWES's net profit margin of 4.10% is significantly lower than the same period one year prior.
- Looking at where the stock is today compared to one year ago, we find that it is higher, and it has outperformed the rise in the S&P 500 over the same period. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
- WORLD ENERGY SOLUTIONS 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, WORLD ENERGY SOLUTIONS INC continued to lose money by earning -$0.01 versus -$0.20 in the prior year.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet Software & Services industry. The net income increased by 138.2% when compared to the same quarter one year prior, rising from -$0.50 million to $0.19 million.