NEW YORK ( TheStreet) -- Mindspeed Technologies (Nasdaq: MSPD) 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, weak operating cash flow, 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 Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 116.3% when compared to the same quarter one year ago, falling from $13.23 million to -$2.16 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 Semiconductors & Semiconductor Equipment industry and the overall market, MINDSPEED TECHNOLOGIES INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has decreased to $7.76 million or 41.84% when compared to the same quarter last year. Despite a decrease in cash flow MINDSPEED TECHNOLOGIES INC is still fairing well by exceeding its industry average cash flow growth rate of -91.83%.
- The share price of MINDSPEED TECHNOLOGIES INC has not done very well: it is down 6.04% 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. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- MINDSPEED TECHNOLOGIES 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 year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, MINDSPEED TECHNOLOGIES INC swung to a loss, reporting -$0.03 versus $0.62 in the prior year. This year, the market expects an improvement in earnings ($0.23 versus -$0.03).