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) -- Federal Agricultural Mortgage (NYSE: AGM) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income and weak operating cash flow.
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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 Thrifts & Mortgage Finance industry. The net income has significantly decreased by 26.5% when compared to the same quarter one year ago, falling from $14.04 million to $10.32 million.
- Net operating cash flow has significantly decreased to -$50.49 million or 380.44% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- AGM, with its decline in revenue, underperformed when compared the industry average of 0.1%. Since the same quarter one year prior, revenues fell by 12.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The gross profit margin for FEDERAL AGRICULTURE MTG CP is currently very high, coming in at 83.80%. Regardless of AGM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 15.99% trails the industry average.
- FEDERAL AGRICULTURE MTG CP's earnings per share declined by 29.3% in the most recent quarter compared to the same quarter a year ago. 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, FEDERAL AGRICULTURE MTG CP increased its bottom line by earning $3.99 versus $1.21 in the prior year. This year, the market expects an improvement in earnings ($4.61 versus $3.99).
-- Written by a member of TheStreet Ratings Staff