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NEW YORK (TheStreet) -- Mandalay Digital Group (MNDL) has been downgraded by TheStreet Ratings from Hold to Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate MANDALAY DIGITAL GROUP INC (MNDL) a SELL. This is driven by multiple 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 poor profit margins and weak operating cash flow."
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Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The gross profit margin for MANDALAY DIGITAL GROUP INC is currently lower than what is desirable, coming in at 32.10%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -83.00% is significantly below that of the industry average.
- Net operating cash flow has significantly decreased to -$3.14 million or 96.67% 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 Software industry and the overall market, MANDALAY DIGITAL GROUP INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Compared to where it was a year ago today, the stock is now trading at a higher level, and has traded in line with the S&P 500. 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.
- MANDALAY DIGITAL GROUP INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, MANDALAY DIGITAL GROUP INC continued to lose money by earning -$0.71 versus -$0.80 in the prior year. This year, the market expects an improvement in earnings (-$0.19 versus -$0.71).
- You can view the full analysis from the report here: MNDL Ratings Report