NEW YORK ( TheStreet) -- Sharps Compliance Corporation (Nasdaq: SMED) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself. Highlights from the ratings report include:
- The gross profit margin for SHARPS COMPLIANCE CORP is currently lower than what is desirable, coming in at 28.80%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -9.80% is significantly below that of the industry average.
- Net operating cash flow has significantly decreased to -$1.65 million or 158.93% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- SMED has underperformed the S&P 500 Index, declining 20.00% from its price level of one year ago. 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.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Health Care Providers & Services industry and the overall market, SHARPS COMPLIANCE CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- SHARPS COMPLIANCE CORP has improved earnings per share by 25.0% 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, SHARPS COMPLIANCE CORP swung to a loss, reporting -$0.19 versus $0.64 in the prior year. This year, the market expects an improvement in earnings (-$0.08 versus -$0.19).
-- Written by a member of TheStreet Ratings Staff