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) -- Recon Technology (Nasdaq: RCON) has been downgraded by TheStreet Ratings from hold to sell. Among the areas we feel are negative, one of the most important has been unimpressive growth in net income over time.
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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 Energy Equipment & Services industry. The net income has significantly decreased by 1152.6% when compared to the same quarter one year ago, falling from $0.02 million to -$0.20 million.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Energy Equipment & Services industry and the overall market, RECON TECHNOLOGY LTD's return on equity significantly trails that of both the industry average and the S&P 500.
- The revenue fell significantly faster than the industry average of 7.5%. Since the same quarter one year prior, revenues fell by 40.2%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- RECON TECHNOLOGY LTD's earnings have gone downhill when comparing its most recently reported quarter with the same quarter a year earlier. This company has not demonstrated a clear trend in earnings over the past two years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, RECON TECHNOLOGY LTD continued to lose money by earning -$0.15 versus -$1.14 in the prior year.
- Compared to where it was trading one year ago, RCON is down 13.28% to its most recent closing price of 1.83. Looking ahead, our view is that this stock still does not have good upside potential and may even suffer further declines.
-- Written by a member of TheStreet Ratings Staff