NEW YORK (TheStreet) -- GAIN Capital Holdings (NYSE:GCAP) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself, deteriorating net income, poor profit margins, disappointing return on equity and feeble growth in its earnings per share. Highlights from the ratings report include:
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 35.65%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 105.49% compared to the year-earlier quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
- 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 Diversified Financial Services industry. The net income has significantly decreased by 105.8% when compared to the same quarter one year ago, falling from $56.78 million to -$3.30 million.
- The gross profit margin for GAIN CAPITAL HOLDINGS INC is currently extremely low, coming in at 0.00%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -10.30% is significantly below that of the industry average.
- 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 Diversified Financial Services industry and the overall market on the basis of return on equity, GAIN CAPITAL HOLDINGS INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- GAIN CAPITAL HOLDINGS 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. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, GAIN CAPITAL HOLDINGS INC reported lower earnings of $0.40 versus $1.21 in the prior year. This year, the market expects an improvement in earnings ($0.60 versus $0.40).
-- Written by a member of TheStreet Ratings Staff
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