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Exide Technologies Inc. Stock Downgraded (XIDE)

NEW YORK ( TheStreet) -- Exide Technologies (Nasdaq: XIDE) 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, generally weak debt management, disappointing return on equity, poor profit margins 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 Auto Components industry. The net income has significantly decreased by 1951.2% when compared to the same quarter one year ago, falling from -$5.19 million to -$106.50 million.
  • The debt-to-equity ratio is very high at 2.86 and currently higher than the industry average, implying that there is very poor management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, XIDE maintains a poor quick ratio of 0.85, which illustrates the inability to avoid short-term cash problems.
  • 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 Auto Components industry and the overall market, EXIDE TECHNOLOGIES's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for EXIDE TECHNOLOGIES is rather low; currently it is at 16.50%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -15.40% is significantly below that of the industry average.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 44.16%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 1871.42% 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.

Exide Technologies engages in the manufacture and supply of lead-acid batteries for transportation and industrial applications in the Americas, Europe, and rest of the world. Exide has a market cap of $232 million and is part of the industrial goods sector and industrial industry. Shares are up 12.5% year to date as of the close of trading on Tuesday.

You can view the full Exide 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.

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