Schmitt Industries Inc Stock Downgraded (SMIT)

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) -- Schmitt Industries (Nasdaq: SMIT) has been downgraded by TheStreet Ratings from hold to sell. Among the areas we feel are negative, one of the most important has been an overall disappointing return on equity.

  • EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.

Highlights from the ratings report include:
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, SCHMITT INDUSTRIES INC/OR's return on equity significantly trails that of both the industry average and the S&P 500.
  • In its most recent trading session, SMIT has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
  • SMIT, with its decline in revenue, underperformed when compared the industry average of 8.8%. Since the same quarter one year prior, revenues slightly dropped by 7.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • SCHMITT INDUSTRIES INC/OR reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. Stable Earnings per share over the past year indicate the company has sound management over its earnings and share float. During the past fiscal year, SCHMITT INDUSTRIES INC/OR's EPS of -$0.17 remained unchanged from the prior years' EPS of -$0.17.
  • 45.24% is the gross profit margin for SCHMITT INDUSTRIES INC/OR which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -5.22% is in-line with the industry average.

Schmitt Industries, Inc. designs, manufactures, and sells computer-controlled vibration detection, and balancing and process control systems primarily to the machine tool industry in North America, Europe, and Asia. It operates in two segments, Balancer and Measurement. Schmitt has a market cap of $8.2 million and is part of the technology sector and electronics industry. Shares are up 7.1% year to date as of the close of trading on Friday.

You can view the full Schmitt Ratings Report or get investment ideas from our investment research center.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

More from Markets

NYSE Suspends Trading for Some Shares of Amazon, Alphabet

NYSE Suspends Trading for Some Shares of Amazon, Alphabet

Stocks Slide Amid a Rise in Bond Yields, Strong Earnings

Stocks Slide Amid a Rise in Bond Yields, Strong Earnings

Video: Jim Cramer Reveals Why He's Cautious on Stocks

Video: Jim Cramer Reveals Why He's Cautious on Stocks

Jim Cramer on Earnings: All Stories Aren't Equal

Jim Cramer on Earnings: All Stories Aren't Equal

4 Stocks Making Important Moves Wednesday

4 Stocks Making Important Moves Wednesday