Why Ecology and Environment (EEI) Stock Finished Down On Tuesday

NEW YORK (TheStreet) -- Shares of Ecology and Environment (EEI) closed lower by -2.82% to $10.34 this afternoon after the company reported a net loss of -$0.3 million, or -8 cents per share for the 2014 third quarter, compared to a net loss of -$0.4 million, or -10 cents per share for the year ago period.

The environmental consulting firm said consolidated revenue for the most recent quarter decreased 2% to $31.5 million, from the $32.2 million reported for the 2013 third quarter.

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Separately, TheStreet Ratings team rates ECOLOGY AND ENVIRONMENT INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:

"We rate ECOLOGY AND ENVIRONMENT INC (EEI) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • EEI's debt-to-equity ratio is very low at 0.07 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, EEI has a quick ratio of 1.91, which demonstrates the ability of the company to cover short-term liquidity needs.
  • 44.47% is the gross profit margin for ECOLOGY AND ENVIRONMENT INC which we consider to be strong. Regardless of EEI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -2.69% trails the industry average.
  • EEI, with its decline in revenue, underperformed when compared the industry average of 3.9%. Since the same quarter one year prior, revenues fell by 19.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • 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 Commercial Services & Supplies industry and the overall market, ECOLOGY AND ENVIRONMENT INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $4.88 million or 48.13% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • You can view the full analysis from the report here: EEI Ratings Report
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