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) -- SciQuest (Nasdaq: SQI) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity and deteriorating net income.
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- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Internet Software & Services industry and the overall market, SCIQUEST INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The change in net income from the same quarter one year ago has exceeded that of the Internet Software & Services industry average, but is less than that of the S&P 500. The net income has decreased by 6.1% when compared to the same quarter one year ago, dropping from $0.76 million to $0.71 million.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry, implying reduced upside potential.
- The gross profit margin for SCIQUEST INC is currently very high, coming in at 73.90%. Regardless of SQI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SQI's net profit margin of 4.20% is significantly lower than the same period one year prior.
- SCIQUEST INC reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SCIQUEST INC turned its bottom line around by earning $0.13 versus -$0.11 in the prior year. This year, the market expects an improvement in earnings ($0.23 versus $0.13).
-- Written by a member of TheStreet Ratings Staff