NEW YORK (TheStreet) -- Fibria Celulose (NYSE:FBR) has been downgraded by TheStreet Ratings from hold to sell. 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, poor profit margins and weak operating cash flow. Highlights from the ratings report include:
- FIBRIA CELULOSE SA 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. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, FIBRIA CELULOSE SA reported lower earnings of $0.67 versus $1.76 in the prior year. For the next year, the market is expecting a contraction of 111.8% in earnings (-$0.08 versus $0.67).
- 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 Paper & Forest Products industry. The net income has significantly decreased by 463.3% when compared to the same quarter one year ago, falling from $182.62 million to -$663.52 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 Paper & Forest Products industry and the overall market, FIBRIA CELULOSE SA's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for FIBRIA CELULOSE SA is currently lower than what is desirable, coming in at 27.50%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -137.40% is significantly below that of the industry average.
- Net operating cash flow has significantly decreased to $32.10 million or 91.49% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
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