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) -- Adept Technology (Nasdaq: ADEP) has been downgraded by TheStreet Ratings from hold to sell. Among the areas we feel are negative, one of the most important has been unimpressive growth in net income over time.
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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 Machinery industry. The net income has significantly decreased by 394.3% when compared to the same quarter one year ago, falling from -$0.62 million to -$3.06 million.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Machinery industry and the overall market, ADEPT TECHNOLOGY INC's return on equity significantly trails that of both the industry average and the S&P 500.
- 43.60% is the gross profit margin for ADEPT TECHNOLOGY INC which we consider to be strong. Regardless of ADEP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ADEP's net profit margin of -26.90% significantly underperformed when compared to the industry average.
- The revenue fell significantly faster than the industry average of 1.0%. Since the same quarter one year prior, revenues fell by 31.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- After a year of stock price fluctuations, the net result is that ADEP's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
-- Written by a member of TheStreet Ratings Staff