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) -- StarTek (NYSE: SRT) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its poor profit margins and weak operating cash flow.
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- The gross profit margin for STARTEK INC is currently extremely low, coming in at 14.50%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -4.32% is significantly below that of the industry average.
- Net operating cash flow has significantly decreased to -$0.23 million or 112.68% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- 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 IT Services industry and the overall market, STARTEK INC's return on equity significantly trails that of both the industry average and the S&P 500.
- This stock has increased by 79.46% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in SRT do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
- STARTEK INC 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. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, STARTEK INC continued to lose money by earning -$0.69 versus -$1.75 in the prior year. This year, the market expects an improvement in earnings (-$0.04 versus -$0.69).
-- Written by a member of TheStreet Ratings Staff