Knight Capital Group Inc. Stock Downgraded (KCG)

NEW YORK (TheStreet) -- Knight Capital Group (NYSE:KCG) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, increase in stock price during the past year and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, generally poor debt management and poor profit margins.

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Highlights from the ratings report include:

• After a year of stock price fluctuations, the net result is that KCG's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
• Regardless of the drop in revenue, the company managed to outperform against the industry average of 17.8%. Since the same quarter one year prior, revenues fell by 14.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
• The debt-to-equity ratio is very high at 3.64 and currently higher than the industry average, implying that there is very poor management of debt levels within the company.
• The gross profit margin for KNIGHT CAPITAL GROUP INC is currently extremely low, coming in at 8.20%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.20% significantly trails the industry average.

Knight Capital Group, Inc., a financial services company, provides access to the capital markets across multiple asset classes to buy-and sell-side firms and corporations, as well as offers capital markets services to corporate issuers and private companies primarily in the United States. The company has a P/E ratio of 9.4, equal to the average financial services industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Knight Capital Group has a market cap of $1.15 billion and is part of the financial sector and financial services industry. Shares are down 0.7% year to date as of the close of trading on Thursday.

You can view the full Knight Capital Group Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

For more information on Knight Capital Group Inc. click any of the following:

• Knight Capital Group Inc. Stock Price

• Knight Capital Group Inc. Analyst Ratings

• Knight Capital Group Inc. Key Stats & Profile

• Knight Capital Group Inc. Earnings

• Knight Capital Group Inc. Ratio Comparison

• Knight Capital Group Inc. Growth Rates

• Knight Capital Group Inc. Balance Sheet

• Knight Capital Group Inc. Cash Flow

• Knight Capital Group Inc. Income Statement