NEW YORK ( TheStreet) -- Towerstream Corporation (Nasdaq: TWER) 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, 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 Diversified Telecommunication Services industry. The net income has significantly decreased by 189.5% when compared to the same quarter one year ago, falling from -$1.51 million to -$4.38 million.
- Net operating cash flow has significantly decreased to -$1.19 million or 193.18% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The share price of TOWERSTREAM CORP has not done very well: it is down 17.69% 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.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Diversified Telecommunication Services industry and the overall market, TOWERSTREAM CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for TOWERSTREAM CORP is rather high; currently it is at 58.00%. Regardless of TWER's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, TWER's net profit margin of -56.00% significantly underperformed when compared to the industry average.
-- Written by a member of TheStreet Ratings Staff