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NEW YORK (TheStreet) -- Geospace Technologies (GEOS) 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 GEOSPACE TECHNOLOGIES CORP (GEOS) 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 feeble growth in its earnings per share, deteriorating net income, disappointing return on equity and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- GEOSPACE TECHNOLOGIES CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, GEOSPACE TECHNOLOGIES CORP reported lower earnings of $2.82 versus $5.36 in the prior year. For the next year, the market is expecting a contraction of 98.2% in earnings ($0.05 versus $2.82).
- 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 Energy Equipment & Services industry. The net income has significantly decreased by 113.4% when compared to the same quarter one year ago, falling from $13.68 million to -$1.83 million.
- 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. In comparison to the other companies in the Energy Equipment & Services industry and the overall market, GEOSPACE TECHNOLOGIES CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 70.13%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 113.33% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- 40.85% is the gross profit margin for GEOSPACE TECHNOLOGIES CORP which we consider to be strong. Regardless of GEOS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, GEOS's net profit margin of -6.97% significantly underperformed when compared to the industry average.
- You can view the full analysis from the report here: GEOS Ratings Report