NEW YORK ( TheStreet) -- Majesco Entertainment Company (Nasdaq: COOL) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and poor profit margins. Highlights from the ratings report include:
- COOL's revenue growth has slightly outpaced the industry average of 3.0%. Since the same quarter one year prior, revenues slightly increased by 7.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Compared to its closing price of one year ago, COOL's share price has jumped by 55.00%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- MAJESCO ENTERTAINMENT CO 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, MAJESCO ENTERTAINMENT CO turned its bottom line around by earning $0.18 versus -$0.02 in the prior year. This year, the market expects an improvement in earnings ($0.38 versus $0.18).
- The gross profit margin for MAJESCO ENTERTAINMENT CO is rather low; currently it is at 16.90%. Regardless of COOL's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, COOL's net profit margin of -15.50% significantly underperformed when compared to the industry average.
- 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 154.7% when compared to the same quarter one year ago, falling from -$1.53 million to -$3.90 million.