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) -- ModusLink Global Solutions (Nasdaq: MLNK) 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, poor profit margins and unimpressive growth in net income.
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- MODUSLINK GLOBAL SOLUTIONS's earnings per share declined by 5.9% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. During the past fiscal year, MODUSLINK GLOBAL SOLUTIONS reported poor results of -$0.85 versus -$0.64 in the prior year.
- The gross profit margin for MODUSLINK GLOBAL SOLUTIONS is currently extremely low, coming in at 11.15%. Regardless of MLNK's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, MLNK's net profit margin of -5.46% significantly underperformed when compared to the industry average.
- The change in net income from the same quarter one year ago has exceeded that of the IT Services industry average, but is less than that of the S&P 500. The net income has decreased by 14.1% when compared to the same quarter one year ago, dropping from -$8.31 million to -$9.48 million.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the IT Services industry and the overall market, MODUSLINK GLOBAL SOLUTIONS's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has significantly increased by 83.59% to -$0.87 million when compared to the same quarter last year. In addition, MODUSLINK GLOBAL SOLUTIONS has also vastly surpassed the industry average cash flow growth rate of -20.35%.