NEW YORK ( TheStreet) -- Global Geophysical Services (NYSE: GGS) 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, generally high debt management risk, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.
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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 266.6% when compared to the same quarter one year ago, falling from $6.93 million to -$11.54 million.
- The debt-to-equity ratio is very high at 3.43 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, GGS maintains a poor quick ratio of 0.89, which illustrates the inability to avoid short-term cash problems.
- 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 Energy Equipment & Services industry and the overall market, GLOBAL GEOPHYSICAL SVCS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The share price of GLOBAL GEOPHYSICAL SVCS INC has not done very well: it is down 23.70% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- GLOBAL GEOPHYSICAL SVCS 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, GLOBAL GEOPHYSICAL SVCS INC swung to a loss, reporting -$0.34 versus $0.16 in the prior year. This year, the market expects an improvement in earnings ($0.01 versus -$0.34).