NEW YORK (TheStreet) -- Shares of body camera maker Digital Ally (DGLY) sold off by 5.83% to $17.60 in late morning trading Wednesday, one day after the stock surged following President Obama's announcement of a new plan that would allocate money to purchase wearable cameras for police officers across the U.S.
The president announced the $263 million federal funding package on Monday. Under the plan, $75 million would go toward the purchase of 50,000 body cameras for police officers. The funding would also be used to train police officers in the use of paramilitary equipment after the events in Ferguson, MO, according to The Verge.
Digital Ally previously received a boost in interest in its body cameras after the first wave of protests and civil unrest following the death of Michael Brown in Ferguson.
Separately, TheStreet Ratings team rates DIGITAL ALLY INC as a "sell" with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate DIGITAL ALLY INC (DGLY) a SELL. This is driven by some concerns, 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, weak operating cash flow and generally high debt management risk."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- DIGITAL ALLY INC 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. The company has suffered a declining pattern earnings per share over the past two years. During the past fiscal year, DIGITAL ALLY INC reported poor results of -$1.14 versus -$0.99 in the prior year.
- 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 Electronic Equipment, Instruments & Components industry. The net income has significantly decreased by 1376.1% when compared to the same quarter one year ago, falling from -$0.07 million to -$0.99 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. Compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, DIGITAL ALLY INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to -$0.60 million or 459.81% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- DGLY's debt-to-equity ratio of 0.75 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.47 is very low and demonstrates very weak liquidity.
- You can view the full analysis from the report here: DGLY Ratings Report