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) -- MTR Gaming Group (Nasdaq: MNTG) 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 generally high debt management risk.
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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 Hotels, Restaurants & Leisure industry. The net income has significantly decreased by 168.3% when compared to the same quarter one year ago, falling from $5.31 million to -$3.63 million.
- 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 Hotels, Restaurants & Leisure industry and the overall market, MTR GAMING GROUP INC'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 -$8.74 million or 279.47% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Although MNTG's debt-to-equity ratio of 44.47 is very high, it is currently less than that of the industry average. Regardless of the company's weak debt-to-equity ratio, MNTG has managed to keep a strong quick ratio of 1.93, which demonstrates the ability to cover short-term cash needs.
- 35.54% is the gross profit margin for MTR GAMING GROUP INC which we consider to be strong. Regardless of MNTG's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MNTG's net profit margin of -2.81% significantly underperformed when compared to the industry average.