NEW YORK ( TheStreet) -- Spanish Broadcasting System (Nasdaq: SBSA) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, generally weak debt management, poor profit margins 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 Media industry. The net income has significantly decreased by 1281.6% when compared to the same quarter one year ago, falling from $0.31 million to -$3.66 million.
- The debt-to-equity ratio is very high at 5.46 and currently higher than the industry average, implying that there is very poor management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, SBSA maintains a poor quick ratio of 0.93, which illustrates the inability to avoid short-term cash problems.
- The gross profit margin for SPANISH BROADCASTING SYS INC is rather low; currently it is at 19.70%. Regardless of SBSA's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, SBSA's net profit margin of -11.40% significantly underperformed when compared to the industry average.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 47.50%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 183.33% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- SPANISH BROADCASTING SYS 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. This company has not demonstrated a clear trend in earnings over the past two years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, SPANISH BROADCASTING SYS INC increased its bottom line by earning $1.88 versus $0.70 in the prior year.
-- Written by a member of TheStreet Ratings Staff