NEW YORK ( TheStreet) -- Unifi (NYSE: UFI) 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 Textiles, Apparel & Luxury Goods industry. The net income has significantly decreased by 97.2% when compared to the same quarter one year ago, falling from $10.24 million to $0.29 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. In comparison to the other companies in the Textiles, Apparel & Luxury Goods industry and the overall market, UNIFI 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 UNIFI INC is currently extremely low, coming in at 10.90%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.20% significantly trails the industry average.
- Net operating cash flow has significantly decreased to $1.82 million or 54.59% when compared to the same quarter last year. Despite a decrease in cash flow of 54.59%, UNIFI INC is in line with the industry average cash flow growth rate of -64.03%.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 42.33%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 98.03% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.