NEW YORK (TheStreet) -- Real Goods Solar (RGSE) shares are falling, down -5.5% to $2.41, on Wednesday after being downgraded to "market perform" from "outperform" by analysts at Cowen and Co. (COWN).
The firm cut its price target to $2.60 from $3.50 while making a valuation call on the solar energy company.
Must Read: Warren Buffett's 25 Favorite Stocks
TheStreet Ratings team rates REAL GOODS SOLAR INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate REAL GOODS SOLAR INC (RGSE) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, poor profit margins and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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 Electrical Equipment industry. The net income has significantly decreased by 290.9% when compared to the same quarter one year ago, falling from -$3.79 million to -$14.83 million.
- The gross profit margin for REAL GOODS SOLAR INC is rather low; currently it is at 18.43%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -66.96% is significantly below that of the industry average.
- Net operating cash flow has significantly decreased to -$11.05 million or 103.31% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- 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 Electrical Equipment industry and the overall market, REAL GOODS SOLAR INC's return on equity significantly trails that of both the industry average and the S&P 500.
- RGSE's debt-to-equity ratio is very low at 0.28 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.87 is somewhat weak and could be cause for future problems.
- You can view the full analysis from the report here: RGSE Ratings Report