Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model NEW YORK ( TheStreet) -- Telenav (Nasdaq: TNAV) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, weak operating cash flow, generally disappointing historical performance in the stock itself and disappointing return on equity.
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- TELENAV INC's earnings per share declined by 25.0% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, TELENAV INC reported lower earnings of $0.73 versus $0.94 in the prior year. For the next year, the market is expecting a contraction of 82.9% in earnings ($0.13 versus $0.73).
- Net operating cash flow has declined marginally to -$6.74 million or 6.73% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- Looking at the price performance of TNAV's shares over the past 12 months, there is not much good news to report: the stock is down 36.32%, 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. 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.
- 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. Compared to other companies in the Software industry and the overall market on the basis of return on equity, TELENAV INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- The change in net income from the same quarter one year ago has significantly exceeded that of the Software industry average, but is less than that of the S&P 500. The net income has significantly decreased by 26.4% when compared to the same quarter one year ago, falling from $9.01 million to $6.63 million.
-- Written by a member of TheStreet Ratings Staff