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) -- Alaska Communications Systems Group (Nasdaq: ALSK) has been downgraded by TheStreet Ratings from hold to sell. Among the areas we feel are negative, one of the most important has been a generally disappointing historical performance in the stock itself.
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- ALSK's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 28.02%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- ALASKA COMMUNICATIONS SYS GP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, ALASKA COMMUNICATIONS SYS GP increased its bottom line by earning $0.35 versus $0.01 in the prior year. For the next year, the market is expecting a contraction of 25.7% in earnings ($0.26 versus $0.35).
- The gross profit margin for ALASKA COMMUNICATIONS SYS GP is rather high; currently it is at 61.10%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 3.80% trails the industry average.
- Net operating cash flow has increased to $25.57 million or 30.64% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 19.93%.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Diversified Telecommunication Services industry. The net income increased by 207.2% when compared to the same quarter one year prior, rising from $1.13 million to $3.47 million.
-- Written by a member of TheStreet Ratings Staff