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) -- NuVasive (Nasdaq: NUVA) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.
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- 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 Health Care Equipment & Supplies industry. The net income has significantly decreased by 46.8% when compared to the same quarter one year ago, falling from $5.38 million to $2.86 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Health Care Equipment & Supplies industry and the overall market, NUVASIVE INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The share price of NUVASIVE INC has not done very well: it is down 23.61% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- NUVASIVE 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. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, NUVASIVE INC swung to a loss, reporting -$1.74 versus $1.80 in the prior year. This year, the market expects an improvement in earnings ($0.94 versus -$1.74).
- The gross profit margin for NUVASIVE INC is currently very high, coming in at 83.20%. Regardless of NUVA's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NUVA's net profit margin of 1.90% is significantly lower than the same period one year prior.
-- Written by a member of TheStreet Ratings Staff