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) -- FAB Universal (AMEX: FU) has been downgraded by TheStreet Ratings from hold to sell. Among the areas we feel are negative, one of the most important has been a generally disappointing historical performance in the stock itself.
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- FU has underperformed the S&P 500 Index, declining 15.16% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- 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 Media industry and the overall market on the basis of return on equity, FAB UNIVERSAL CORP underperformed against that of the industry average and is significantly less than that of the S&P 500.
- 44.28% is the gross profit margin for FAB UNIVERSAL CORP which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, FU's net profit margin of 13.27% compares favorably to the industry average.
- Net operating cash flow has significantly increased by 2329.07% to $10.12 million when compared to the same quarter last year. In addition, FAB UNIVERSAL CORP has also vastly surpassed the industry average cash flow growth rate of -15.58%.
- FU's debt-to-equity ratio is very low at 0.03 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.43, which illustrates the ability to avoid short-term cash problems.