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) -- Key Technology (Nasdaq: KTEC) 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, deteriorating net income, disappointing return on equity, poor profit margins and weak operating cash flow.
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- KEY TECHNOLOGY 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. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, KEY TECHNOLOGY INC reported lower earnings of $0.27 versus $0.69 in the prior year. For the next year, the market is expecting a contraction of 155.6% in earnings (-$0.15 versus $0.27).
- 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 Machinery industry. The net income has significantly decreased by 87.0% when compared to the same quarter one year ago, falling from $2.04 million to $0.26 million.
- 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 Machinery industry and the overall market, KEY TECHNOLOGY INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for KEY TECHNOLOGY INC is currently lower than what is desirable, coming in at 32.80%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.80% trails that of the industry average.
- Net operating cash flow has significantly decreased to $0.35 million or 80.88% 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.
-- Written by a member of TheStreet Ratings Staff