NEW YORK ( TheStreet) -- Hallmark Financial Services (Nasdaq: HALL) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity, poor profit margins and weak operating cash flow. Highlights from the ratings report include:
- HALLMARK FINANCIAL SERVICES 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. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, HALLMARK FINANCIAL SERVICES reported lower earnings of $0.36 versus $1.19 in the prior year. For the next year, the market is expecting a contraction of 308.3% in earnings (-$0.75 versus $0.36).
- 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 Insurance industry. The net income has significantly decreased by 87.7% when compared to the same quarter one year ago, falling from $1.02 million to $0.13 million.
- 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 Insurance industry and the overall market, HALLMARK FINANCIAL SERVICES's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for HALLMARK FINANCIAL SERVICES is currently extremely low, coming in at 4.10%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.10% trails that of the industry average.
- Net operating cash flow has significantly decreased to $4.02 million or 65.03% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.