NEW YORK ( TheStreet) -- Radisys Corporation (Nasdaq: RSYS) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • 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. Compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, RADISYS CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for RADISYS CORP is currently lower than what is desirable, coming in at 34.20%. Regardless of RSYS's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, RSYS's net profit margin of 2.80% compares favorably to the industry average.
  • Compared to where it was trading one year ago, RSYS is down 46.97% to its most recent closing price of 5.25. Looking ahead, our view is that this stock still does not have good upside potential and may even suffer further declines.
  • RADISYS CORP has improved earnings per share by 11.1% 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 two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, RADISYS CORP continued to lose money by earning -$0.02 versus -$1.84 in the prior year. This year, the market expects an improvement in earnings ($0.49 versus -$0.02).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Electronic Equipment, Instruments & Components industry average. The net income increased by 27.4% when compared to the same quarter one year prior, rising from $2.17 million to $2.77 million.

RadiSys Corporation develops, produces, and markets application-ready software and hardware platforms for Internet protocol (IP)-based wireless, wireline, and video networks markets. The company has a P/E ratio of 93.2, above the S&P 500 P/E ratio of 17.7. Radisys has a market cap of $155.5 million and is part of the technology sector and computer hardware industry. Shares are down 41% year to date as of the close of trading on Thursday.

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

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