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NEW YORK (TheStreet) -- Recon Technology (RCON) 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 RECON TECHNOLOGY LTD (RCON) a SELL. This is driven by a few notable 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 deteriorating net income, disappointing return on equity, poor profit margins and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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 8575.0% when compared to the same quarter one year ago, falling from $0.01 million to -$0.68 million.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Energy Equipment & Services industry and the overall market, RECON TECHNOLOGY LTD's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for RECON TECHNOLOGY LTD is rather low; currently it is at 17.12%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -96.71% is significantly below that of the industry average.
- Net operating cash flow has decreased to -$1.62 million or 24.82% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- This stock's share value has moved by only 19.05% over the past year. 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.
- You can view the full analysis from the report here: RCON Ratings Report