NEW YORK ( TheStreet) -- Rentech (AMEX: RTK) 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 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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 554.6% when compared to the same quarter one year ago, falling from -$9.03 million to -$59.09 million.
  • RENTECH 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 two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, RENTECH INC reported poor results of -$0.30 versus -$0.19 in the prior year. This year, the market expects an improvement in earnings ($0.02 versus -$0.30).
  • Looking at where the stock is today compared to one year ago, we find that it is higher, and it has outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
  • 39.50% is the gross profit margin for RENTECH INC which we consider to be strong. 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 -153.00% is in-line with the industry average.
  • Net operating cash flow has significantly increased by 113.27% to $31.71 million when compared to the same quarter last year. In addition, RENTECH INC has also vastly surpassed the industry average cash flow growth rate of 32.90%.

Rentech, Inc. owns and develops technologies that enable the production of synthetic fuels and renewable power when integrated with third-party technologies. Rentech has a market cap of $308.5 million and is part of the basic materials sector and chemicals industry. Shares are up 12.3% year to date as of the close of trading on Friday.

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