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) -- Tree.com (Nasdaq: TREE) has been downgraded by TheStreet Ratings from hold to sell. Among the areas we feel are negative, one of the most important has been generally deteriorating net income.
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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 Thrifts & Mortgage Finance industry. The net income has significantly decreased by 100.0% when compared to the same quarter one year ago, falling from $2.32 million to $0.00 million.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Thrifts & Mortgage Finance industry and the overall market on the basis of return on equity, TREE.COM INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
- TREE.COM INC's earnings per share declined by 50.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, TREE.COM INC continued to lose money by earning -$0.06 versus -$0.23 in the prior year. This year, the market expects an improvement in earnings ($0.89 versus -$0.06).
- The gross profit margin for TREE.COM INC is currently very high, coming in at 95.87%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, TREE's net profit margin of 0.00% significantly trails the industry average.
- Compared to its closing price of one year ago, TREE's share price has jumped by 80.08%, exceeding the performance of the broader market during that same time frame. Regarding the future course of this stock, we feel that the risks involved in investing in TREE do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.