NEW YORK ( TheStreet) -- Learning Tree International (Nasdaq: LTRE) 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, feeble growth in its earnings per share, deteriorating net income, disappointing return on equity and weak operating cash flow. Highlights from the ratings report include:
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 47.61%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 128.57% compared to the year-earlier quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, LTRE is still more expensive than most of the other companies in its industry.
- LEARNING TREE INTL INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, LEARNING TREE INTL INC reported lower earnings of $0.24 versus $0.32 in the prior year. For the next year, the market is expecting a contraction of 181.3% in earnings (-$0.20 versus $0.24).
- 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 112.8% when compared to the same quarter one year ago, falling from -$1.00 million to -$2.12 million.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. In comparison to the other companies in the Diversified Consumer Services industry and the overall market, LEARNING TREE INTL INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- Net operating cash flow has significantly decreased to $0.66 million or 81.85% when compared to the same quarter last year. Despite a decrease in cash flow of 81.85%, LEARNING TREE INTL INC is still significantly exceeding the industry average of -177.86%.
-- Written by a member of TheStreet Ratings Staff