NEW YORK ( TheStreet) -- NetSpend Holdings (Nasdaq: NTSP) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself, deteriorating net income, disappointing return on equity and poor profit margins. Highlights from the ratings report include:
- The share price of NETSPEND HOLDINGS INC has not done very well: it is down 22.24% 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. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
- 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 Consumer Finance industry. The net income has significantly decreased by 174.4% when compared to the same quarter one year ago, falling from $7.78 million to -$5.79 million.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Consumer Finance industry and the overall market, NETSPEND HOLDINGS INC's return on equity is below that of both the industry average and the S&P 500.
- The gross profit margin for NETSPEND HOLDINGS INC is currently lower than what is desirable, coming in at 33.10%. Regardless of NTSP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, NTSP's net profit margin of -6.30% significantly underperformed when compared to the industry average.
- Net operating cash flow has significantly increased by 68.01% to $17.04 million when compared to the same quarter last year. Despite an increase in cash flow of 68.01%, NETSPEND HOLDINGS INC is still growing at a significantly lower rate than the industry average of 132.55%.
-- Written by a member of TheStreet Ratings Staff