NEW YORK (TheStreet) -- Checkpoint Systems (NYSE:CKP) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, feeble growth in its earnings per share and generally disappointing historical performance in the stock itself. Highlights from the ratings report include:
- 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 795.6% when compared to the same quarter one year ago, falling from $7.08 million to -$49.26 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, CHECKPOINT SYSTEMS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- CHECKPOINT SYSTEMS INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Stable earnings per share over the past year indicate the company has managed its earnings and share float. We anticipate this stability to falter in the coming year and, in turn, the company to deliver lower earnings per share than prior full year. During the past fiscal year, CHECKPOINT SYSTEMS INC's EPS of $0.67 remained unchanged from the prior years' EPS of $0.67. For the next year, the market is expecting a contraction of 39.5% in earnings ($0.41 versus $0.67).
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 40.17%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 811.76% compared to the year-earlier quarter. 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.
- 37.40% is the gross profit margin for CHECKPOINT SYSTEMS INC which we consider to be strong. Regardless of CKP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CKP's net profit margin of -22.60% significantly underperformed when compared to the industry average.
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