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) -- Global-Tech Advanced Innovations (Nasdaq: GAI) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity and poor profit margins.
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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 Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 98.2% when compared to the same quarter one year ago, falling from $3.32 million to $0.06 million.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, GLOBAL-TECH ADV INNOVATIONS's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for GLOBAL-TECH ADV INNOVATIONS is currently extremely low, coming in at 12.00%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.29% significantly trails the industry average.
- GLOBAL-TECH ADV INNOVATIONS 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. 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, GLOBAL-TECH ADV INNOVATIONS turned its bottom line around by earning $0.01 versus -$1.32 in the prior year.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 14.9%. Since the same quarter one year prior, revenues slightly dropped by 7.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
-- Written by a member of TheStreet Ratings Staff