NEW YORK ( TheStreet) -- Digirad Corporation (Nasdaq: DRAD) 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, poor profit margins and generally disappointing historical performance in the stock itself. 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 Health Care Equipment & Supplies industry. The net income has significantly decreased by 405.7% when compared to the same quarter one year ago, falling from -$0.56 million to -$2.83 million.
- The gross profit margin for DIGIRAD CORP is currently lower than what is desirable, coming in at 25.40%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -23.80% is significantly below that of the industry average.
- The share price of DIGIRAD CORP has not done very well: it is down 23.87% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Health Care Equipment & Supplies industry and the overall market, DIGIRAD CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- DIGIRAD CORP 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 not demonstrated a clear trend in earnings over the past two years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, DIGIRAD CORP continued to lose money by earning -$0.17 versus -$0.32 in the prior year.
-- Written by a member of TheStreet Ratings Staff