We've initiated coverage of CIBT Education Group (MBA), which engages in the development and operation of academic, technical and career training schools in China, with a sell rating. This initial rating driven by a number of negative factors, 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. Among the areas we feel are negative, one of the most important has been an overall disappointing return on equity.
The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Diversified Consumer Services industry and the overall market, CIBT's return on equity significantly trails that of both the industry average and the S&P 500.
The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Diversified Consumer Services industry average, but is greater than that of the S&P 500. The net income increased by 96.8% when compared to the same quarter one year prior, rising from -$0.90 million to -$0.03 million.
CIBT reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, CIBT EDUCATION GROUP INC swung to a loss, reporting -$0.02 versus $0.01 in the prior year.MBA's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 85.47%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. The gross profit margin for CIBT is currently very high, coming in at 70.40%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -0.20% is in-line with the industry average.