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) -- Global Geophysical Services (NYSE: GGS) 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, generally high debt management risk and poor profit margins.
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- GGS'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 58.16%, 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. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
- The debt-to-equity ratio is very high at 2.51 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, GGS maintains a poor quick ratio of 1.00, which illustrates the inability to avoid short-term cash problems.
- The gross profit margin for GLOBAL GEOPHYSICAL SVCS INC is currently lower than what is desirable, coming in at 26.10%. It has decreased significantly from the same period last year. Along with this, the net profit margin of 2.60% significantly trails the industry average.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. When compared to other companies in the Energy Equipment & Services industry and the overall market, GLOBAL GEOPHYSICAL SVCS INC's return on equity is below that of both the industry average and the S&P 500.
-- Written by a member of TheStreet Ratings Staff