Editor's Note: 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. NEW YORK (TheStreet) -- MBIA (NYSE:MBI) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, generally high debt management risk and feeble growth in its earnings per share.
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- 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 Insurance industry. The net income has significantly decreased by 98.4% when compared to the same quarter one year ago, falling from $445.00 million to $7.00 million.
- The debt-to-equity ratio is very high at 4.49 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
- MBIA 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 year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, MBIA INC swung to a loss, reporting -$6.67 versus $0.28 in the prior year. This year, the market expects an improvement in earnings ($3.33 versus -$6.67).
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Insurance industry and the overall market on the basis of return on equity, MBIA INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
- MBI, with its very weak revenue results, has greatly underperformed against the industry average of 21.6%. Since the same quarter one year prior, revenues plummeted by 79.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
-- Written by a member of TheStreet Ratings Staff
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