NEW YORK ( TheStreet) -- Energy Solutions (NYSE: ES) 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, generally weak debt management, disappointing return on equity, poor profit margins and weak operating cash flow. 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 Commercial Services & Supplies industry. The net income has significantly decreased by 106.8% when compared to the same quarter one year ago, falling from $9.91 million to -$0.67 million.
- The debt-to-equity ratio is very high at 2.80 and currently higher than the industry average, implying that there is very poor management of debt levels within the company. To add to this, ES has a quick ratio of 0.57, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Commercial Services & Supplies industry and the overall market, ENERGYSOLUTIONS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for ENERGYSOLUTIONS INC is currently extremely low, coming in at 10.30%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -0.10% trails that of the industry average.
- Net operating cash flow has significantly decreased to -$25.86 million or 263.07% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
-- Written by a member of TheStreet Ratings Staff