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) -- Comstock (Nasdaq: CHCI) 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 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 Household Durables industry. The net income has significantly decreased by 81.7% when compared to the same quarter one year ago, falling from $3.95 million to $0.72 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.
- 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 Household Durables industry and the overall market, COMSTOCK HOLDING COS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for COMSTOCK HOLDING COS INC is currently extremely low, coming in at 4.70%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, CHCI's net profit margin of 6.25% compares favorably to the industry average.
- COMSTOCK HOLDING COS INC reported significant earnings per share improvement in the most recent quarter compared to 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, COMSTOCK HOLDING COS INC swung to a loss, reporting -$0.47 versus $0.10 in the prior year.