NEW YORK ( TheStreet) -- Netsol Technologies (Nasdaq: NTWK) 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 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 Software industry. The net income has significantly decreased by 193.1% when compared to the same quarter one year ago, falling from $1.57 million to -$1.46 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 Software industry and the overall market, NETSOL TECHNOLOGIES INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 68.50%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 175.00% 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.
  • NETSOL 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. This company has not demonstrated a clear trend in earnings over the past two years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, NETSOL TECHNOLOGIES INC increased its bottom line by earning $0.11 versus $0.04 in the prior year.
  • NTWK, with its decline in revenue, underperformed when compared the industry average of 0.8%. Since the same quarter one year prior, revenues fell by 25.9%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.

NetSol Technologies, Inc. designs, develops, and markets software products for the automobile finance and leasing, banking, healthcare, and financial services industries worldwide. The company offers NetSol Financial Suite (NFS), an end-to-end solution that covers the leasing and finance cycle. The company has a P/E ratio of 3.8, above the average computer software & services industry P/E ratio of 2.5 and below the S&P 500 P/E ratio of 17.7. Netsol has a market cap of $24.6 million and is part of the technology sector and computer software & services industry. Shares are down 75.6% year to date as of the close of trading on Wednesday.

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