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) -- SeaChange International (Nasdaq: SEAC) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and feeble growth in the company's earnings per share.
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- Compared to its closing price of one year ago, SEAC's share price has jumped by 39.25%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Software industry. The net income increased by 41.7% when compared to the same quarter one year prior, rising from $0.41 million to $0.58 million.
- The gross profit margin for SEACHANGE INTERNATIONAL INC is rather high; currently it is at 53.70%. Regardless of SEAC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SEAC's net profit margin of 1.47% is significantly lower than the industry average.
- SEACHANGE INTERNATIONAL 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 year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, SEACHANGE INTERNATIONAL INC swung to a loss, reporting -$0.06 versus $0.92 in the prior year. This year, the market expects an improvement in earnings ($0.40 versus -$0.06).
- 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 Software industry and the overall market, SEACHANGE INTERNATIONAL INC's return on equity significantly trails that of both the industry average and the S&P 500.
-- Written by a member of TheStreet Ratings Staff