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LightInTheBox (LITB) Dives on CFO Departure, Chinese Web Stocks Tumble

Stocks in this article: DANGLITBYOKUSINABIDU

TheStreet Ratings team rates E-COMMERCE CH DANGDANG -ADR as a Sell with a ratings score of D. The team has this to say about their recommendation:

"We rate E-COMMERCE CH DANGDANG -ADR (DANG) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. Among the areas we feel are negative, one of the most important has been poor profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The gross profit margin for E-COMMERCE CH DANGDANG -ADR is rather low; currently it is at 18.35%. Regardless of DANG's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -1.82% trails the industry average.
  • 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 Internet & Catalog Retail industry and the overall market, E-COMMERCE CH DANGDANG -ADR's return on equity significantly trails that of both the industry average and the S&P 500.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Internet & Catalog Retail industry average, but is greater than that of the S&P 500. The net income increased by 71.4% when compared to the same quarter one year prior, rising from -$15.92 million to -$4.56 million.
  • E-COMMERCE CH DANGDANG -ADR reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, E-COMMERCE CH DANGDANG -ADR reported poor results of -$0.89 versus -$0.46 in the prior year. This year, the market expects an improvement in earnings (-$0.42 versus -$0.89).
  • DANG has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Despite the fact that DANG's debt-to-equity ratio is low, the quick ratio, which is currently 0.52, displays a potential problem in covering short-term cash needs.

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