Nettlinx downgraded to 'Sell' by MarketsMOJO due to weak fundamentals

Nettlinx, a microcap IT software company, has recently been downgraded to a 'Sell' by MarketsMOJO on July 8th, 2024. This downgrade is based on several factors that indicate a weak long-term fundamental strength for the company.
One of the main reasons for the downgrade is the company's -142.20% CAGR growth in operating profits over the last 5 years. This signifies a lack of growth and profitability for the company. Additionally, Nettlinx has a low return on equity of 5.61%, indicating low profitability per unit of shareholders' funds.

Furthermore, the company's valuation is considered expensive with a 4.2 enterprise value to capital employed ratio and a PEG ratio of 0. This suggests that the stock is trading at a discount compared to its historical valuations.

Another concerning factor is the decreasing stake of promoters in the company, which has decreased by -2.52% in the previous quarter. This could indicate a lack of confidence in the future of the business.

In the past year, Nettlinx has underperformed the market with a return of only 17.62%, compared to the market's return of 37.98%. This further supports the 'Sell' rating given by MarketsMOJO.

However, the company did declare outstanding results in March 2024, with a growth in net profit of 194.92%. It has also consistently declared positive results for the last 4 quarters. This could be a positive sign for the company's future.

On a technical level, the stock's trend is currently sideways, indicating no clear price momentum. This is a deterioration from the previous mildly bullish trend.

In conclusion, based on the above factors, it is recommended to approach Nettlinx stock with caution and consider the 'Sell' rating given by MarketsMOJO.