NEW YORK (TheStreet) -- PFSweb (Nasdaq:PFSW) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its poor profit margins and generally disappointing historical performance in the stock itself. Highlights from the ratings report include:
- The gross profit margin for PFSWEB INC is rather low; currently it is at 16.30%. Regardless of PFSW's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, PFSW's net profit margin of -1.70% significantly underperformed when compared to the industry average.
- PFSW'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 33.34%, 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. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the IT Services industry and the overall market, PFSWEB INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The debt-to-equity ratio is somewhat low, currently at 0.73, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.80 is somewhat weak and could be cause for future problems.
- PFSWEB INC has improved earnings per share by 28.6% in the most recent quarter compared to the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. However, the consensus estimates suggest that there will be an upward trend in the coming year. During the past fiscal year, PFSWEB INC's EPS of -$0.30 remained unchanged from the prior years' EPS of -$0.30. This year, the market expects an improvement in earnings (-$0.17 versus -$0.30).
-- Written by a member of TheStreet Ratings Staff
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