NEW YORK ( TheStreet) -- MDC Partners (Nasdaq: MDCA) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, generally weak debt management, disappointing return on equity, poor profit margins and weak operating cash flow. 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 Media industry. The net income has significantly decreased by 79.3% when compared to the same quarter one year ago, falling from -$10.92 million to -$19.57 million.
- The debt-to-equity ratio is very high at 22.94 and currently higher than the industry average, implying that there is very poor management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, MDCA maintains a poor quick ratio of 0.73, which illustrates the inability to avoid short-term cash problems.
- 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 Media industry and the overall market, MDC PARTNERS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for MDC PARTNERS INC is currently lower than what is desirable, coming in at 26.40%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -8.20% is significantly below that of the industry average.
- Net operating cash flow has decreased to $19.62 million or 30.54% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.