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) -- Paulson Capital (Nasdaq: PLCC) 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, deteriorating net income and disappointing return on equity.
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- PAULSON CAPITAL CORP has experienced 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 suffered a declining pattern earnings per share over the past two years. During the past fiscal year, PAULSON CAPITAL CORP reported poor results of -$0.40 versus -$0.08 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 Capital Markets industry. The net income has significantly decreased by 845.8% when compared to the same quarter one year ago, falling from -$0.24 million to -$2.27 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 Capital Markets industry and the overall market, PAULSON CAPITAL CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- PLCC, with its very weak revenue results, has greatly underperformed against the industry average of 5.2%. Since the same quarter one year prior, revenues plummeted by 58.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Net operating cash flow has slightly increased to -$1.20 million or 9.94% when compared to the same quarter last year. Despite an increase in cash flow, PAULSON CAPITAL CORP's average is still marginally south of the industry average growth rate of 12.56%.