NEW YORK ( TheStreet) -- Image Sensing Systems (Nasdaq: ISNS) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • IMAGE SENSING SYSTEMS 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. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, IMAGE SENSING SYSTEMS INC reported lower earnings of $0.64 versus $0.94 in the prior year. For the next year, the market is expecting a contraction of 51.6% in earnings ($0.31 versus $0.64).
  • 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 Electronic Equipment, Instruments & Components industry. The net income has significantly decreased by 874.6% when compared to the same quarter one year ago, falling from $1.13 million to -$8.73 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 Electronic Equipment, Instruments & Components industry and the overall market, IMAGE SENSING SYSTEMS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$0.65 million or 379.82% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 56.13%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 886.95% 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.

Image Sensing Systems, Inc., a technology company, provides software-based detection solutions for the intelligent transportation systems (ITS) sector and adjacent markets, including security, police, and parking internationally. The company has a P/E ratio of 62.3, above the average computer software & services industry P/E ratio of 18.9 and above the S&P 500 P/E ratio of 17.7. Image Sensing Systems has a market cap of $30.5 million and is part of the technology sector and computer software & services industry. Shares are down 52.3% year to date as of the close of trading on Monday.

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