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) -- Dominion Diamond (NYSE: DDC) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, unimpressive growth in net income, disappointing return on equity and poor profit margins.
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- DOMINION DIAMOND CORP 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 two years. During the past fiscal year, DOMINION DIAMOND CORP reported lower earnings of $0.26 versus $0.29 in the prior year.
- 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 Metals & Mining industry. The net income has significantly decreased by 442.9% when compared to the same quarter one year ago, falling from $4.76 million to -$16.30 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 Metals & Mining industry and the overall market on the basis of return on equity, DOMINION DIAMOND CORP underperformed against that of the industry average and is significantly less than that of the S&P 500.
- The gross profit margin for DOMINION DIAMOND CORP is rather low; currently it is at 22.95%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -6.22% is significantly below that of the industry average.
- In its most recent trading session, DDC has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Regardless of the rise in share value over the previous year, we feel that the risks involved in investing in this stock do not compensate for any future upside potential.