NEW YORK ( TheStreet) -- Planar Systems (Nasdaq: PLNR) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, weak operating cash flow 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 Electronic Equipment, Instruments & Components industry. The net income has significantly decreased by 145.3% when compared to the same quarter one year ago, falling from -$1.30 million to -$3.20 million.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, PLANAR SYSTEMS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for PLANAR SYSTEMS INC is rather low; currently it is at 23.20%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -6.70% is significantly below that of the industry average.
- Net operating cash flow has significantly decreased to -$1.10 million or 360.04% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 25.61%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 128.57% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
-- Written by a member of TheStreet Ratings Staff