NEW YORK ( TheStreet) -- Ambow Education (NYSE: AMBO) 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 Diversified Consumer Services industry. The net income has significantly decreased by 145.1% when compared to the same quarter one year ago, falling from $13.99 million to -$6.30 million.
- Looking at the price performance of AMBO's shares over the past 12 months, there is not much good news to report: the stock is down 34.70%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- AMBOW EDUCATION HLDGS's earnings per share declined by 5.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, AMBOW EDUCATION HLDGS increased its bottom line by earning $0.49 versus $0.43 in the prior year. This year, the market expects an improvement in earnings ($4.75 versus $0.49).
- AMBO's debt-to-equity ratio is very low at 0.06 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Despite the fact that AMBO's debt-to-equity ratio is low, the quick ratio, which is currently 0.52, displays a potential problem in covering short-term cash needs.
- In comparison to the other companies in the Diversified Consumer Services industry and the overall market, AMBOW EDUCATION HLDGS's return on equity is significantly below that of the industry average and is below that of the S&P 500.
-- Written by a member of TheStreet Ratings Staff