NEW YORK ( TheStreet) -- Heckmann (NYSE: HEK) has been downgraded by TheStreet Ratings from hold to sell. Among the areas we feel are negative, one of the most important has been generally deteriorating net income. 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 Beverages industry. The net income has significantly decreased by 1006.2% when compared to the same quarter one year ago, falling from -$1.91 million to -$21.07 million.
- After a year of stock price fluctuations, the net result is that HEK's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
- 38.20% is the gross profit margin for HECKMANN CORP which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, HEK's net profit margin of -44.10% significantly underperformed when compared to the industry average.
- Compared to other companies in the Beverages industry and the overall market, HECKMANN CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- The current debt-to-equity ratio, 0.33, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.40, which illustrates the ability to avoid short-term cash problems.