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) -- TGC Industries (Nasdaq: TGE) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, poor profit margins, generally disappointing historical performance in the stock itself and deteriorating net income.
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- 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 Energy Equipment & Services industry and the overall market, TGC INDUSTRIES INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for TGC INDUSTRIES INC is currently extremely low, coming in at 3.17%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -22.10% is significantly below that of the industry average.
- TGE's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 52.62%, which is also worse than the performance of the S&P 500 Index. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- The change in net income from the same quarter one year ago has exceeded that of the Energy Equipment & Services industry average, but is less than that of the S&P 500. The net income has decreased by 0.7% when compared to the same quarter one year ago, dropping from -$4.00 million to -$4.03 million.
- The revenue fell significantly faster than the industry average of 21.0%. Since the same quarter one year prior, revenues fell by 42.1%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.