NEW YORK ( TheStreet) -- Mitek Systems (Nasdaq: MITK) has been downgraded by TheStreet Ratings from hold to sell. Among the areas we feel are negative, one of the most important has been unimpressive growth in net income over time. 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 221.0% when compared to the same quarter one year ago, falling from $0.18 million to -$0.22 million.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Software industry and the overall market, MITEK SYSTEMS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- MITEK 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. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, MITEK SYSTEMS INC continued to lose money by earning -$0.02 versus -$0.04 in the prior year. This year, the market expects an improvement in earnings ($0.24 versus -$0.02).
- The gross profit margin for MITEK SYSTEMS INC is currently very high, coming in at 91.10%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -7.20% is in-line with the industry average.
- MITK has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 10.60, which clearly demonstrates the ability to cover short-term cash needs.