NEW YORK ( TheStreet) -- Mitek Systems (Nasdaq: MITK) 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 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 Software industry. The net income has significantly decreased by 599.5% when compared to the same quarter one year ago, falling from $0.57 million to -$2.85 million.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 55.23%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 650.00% 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.
- 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 Software industry and the overall market, MITEK SYSTEMS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for MITEK SYSTEMS INC is currently very high, coming in at 74.10%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, MITK's net profit margin of -239.00% significantly underperformed when compared to the industry average.
- MITK, with its very weak revenue results, has greatly underperformed against the industry average of 11.9%. Since the same quarter one year prior, revenues plummeted by 58.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
-- Written by a member of TheStreet Ratings Staff