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) -- Performant Financial (Nasdaq: PFMT) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself and generally high debt management risk.
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- PFMT's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 41.72%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- Although PFMT's debt-to-equity ratio of 2.09 is very high, it is currently less than that of the industry average. Regardless of the company's weak debt-to-equity ratio, PFMT has managed to keep a strong quick ratio of 2.07, which demonstrates the ability to cover short-term cash needs.
- 40.21% is the gross profit margin for PERFORMANT FINANCIAL CORP which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 20.12% significantly outperformed against the industry average.
- Net operating cash flow has significantly increased by 293.40% to $23.38 million when compared to the same quarter last year. In addition, PERFORMANT FINANCIAL CORP has also vastly surpassed the industry average cash flow growth rate of 9.35%.