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) -- LMI Aerospace (Nasdaq: LMIA) 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, poor profit margins, generally high debt management risk and generally disappointing historical performance in the stock itself.

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Highlights from the ratings report include:
  • 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 Aerospace & Defense industry. The net income has significantly decreased by 7151.6% when compared to the same quarter one year ago, falling from $0.95 million to -$67.06 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 Aerospace & Defense industry and the overall market, LMI AEROSPACE INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for LMI AEROSPACE INC is rather low; currently it is at 23.74%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -69.58% is significantly below that of the industry average.
  • The debt-to-equity ratio is very high at 2.02 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Regardless of the company's weak debt-to-equity ratio, LMIA has managed to keep a strong quick ratio of 1.70, which demonstrates the ability to cover short-term cash needs.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 35.38%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 6737.50% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.

LMI Aerospace Inc. provides structural assemblies, kits and components, and design engineering services to the aerospace and defense markets in the United States. LMI has a market cap of $173.4 million and is part of the industrial goods sector and aerospace/defense industry. Shares are down 8.3% year to date as of the close of trading on Thursday.

You can view the full LMI Ratings Report or get investment ideas from our investment research center.

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