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) -- Towerstream Corporation (Nasdaq: TWER) 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, poor profit margins, weak operating cash flow 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 Diversified Telecommunication Services industry. The net income has significantly decreased by 152.8% when compared to the same quarter one year ago, falling from -$2.14 million to -$5.41 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 Diversified Telecommunication Services industry and the overall market, TOWERSTREAM CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for TOWERSTREAM CORP is currently lower than what is desirable, coming in at 31.50%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -66.50% is significantly below that of the industry average.
- Net operating cash flow has significantly decreased to -$2.47 million or 768.64% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- TOWERSTREAM CORP 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. Stable earnings per share over the past year indicate the company has managed its earnings and share float. We anticipate this stability to falter in the coming year and, in turn, the company to deliver lower earnings per share than prior full year. During the past fiscal year, TOWERSTREAM CORP continued to lose money by earning -$0.15 versus -$0.16 in the prior year. For the next year, the market is expecting a contraction of 146.7% in earnings (-$0.37 versus -$0.15).
-- Written by a member of TheStreet Ratings Staff