NEW YORK ( TheStreet) -- Higher One Holdings (NYSE: ONE) 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 and disappointing return on equity.
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- ONE's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 39.96%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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, ONE is still more expensive than most of the other companies in its industry.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to other companies in the IT Services industry and the overall market on the basis of return on equity, HIGHER ONE HOLDINGS INC has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.
- The gross profit margin for HIGHER ONE HOLDINGS INC is rather high; currently it is at 66.90%. Regardless of ONE's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ONE's net profit margin of 23.20% compares favorably to the industry average.
- Net operating cash flow has significantly increased by 57.61% to $32.20 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 11.44%.
- HIGHER ONE HOLDINGS INC has improved earnings per share by 21.1% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, HIGHER ONE HOLDINGS INC increased its bottom line by earning $0.54 versus $0.46 in the prior year. This year, the market expects an improvement in earnings ($0.83 versus $0.54).
-- Written by a member of TheStreet Ratings Staff