Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link. NEW YORK ( TheStreet) -- Tecumseh Products Company (Nasdaq: TECUB) 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, weak operating cash flow 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 Machinery industry. The net income has significantly decreased by 114.3% when compared to the same quarter one year ago, falling from $44.00 million to -$6.30 million.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Machinery industry and the overall market, TECUMSEH PRODUCTS CO's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to $3.20 million or 76.29% 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 gross profit margin for TECUMSEH PRODUCTS CO is currently extremely low, coming in at 12.39%. Regardless of TECUB's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, TECUB's net profit margin of -2.76% significantly underperformed when compared to the industry average.
- TECUMSEH PRODUCTS CO 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, TECUMSEH PRODUCTS CO turned its bottom line around by earning $1.25 versus -$3.86 in the prior year.