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TheStreet Open House

Groupon (GRPN) Stock Up After Elite Deal Series Announcement

NEW YORK (TheStreet) -- Groupon (GRPN) stock is up 3.19% to $8.09 Tuesday afternoon after the online shopping center announced its newest line of deals.

The Elite Deal Series will be an ongoing collection of luxury goods such as diamond rings and high end designer handbags, featuring premium plus pricing.

Beginning today, Groupon shoppers will receive $20 worth of "Groupon bucks" for the premium-plus price of $40. The series' first deal, the $40 for $20 deal will be available for a limited time. But the $20 in "Groupon bucks" will be valid towards anything on Groupon.

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TheStreet Ratings team rates GROUPON INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate GROUPON INC (GRPN) a SELL. This is driven by a number of negative factors, 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. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income and disappointing return on equity."

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

  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Internet & Catalog Retail industry average. The net income has decreased by 0.3% when compared to the same quarter one year ago, dropping from -$80.98 million to -$81.25 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Internet & Catalog Retail industry and the overall market, GROUPON INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for GROUPON INC is rather high; currently it is at 52.36%. Regardless of GRPN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, GRPN's net profit margin of -10.57% significantly underperformed when compared to the industry average.
  • GROUPON INC reported flat earnings per share in the most recent quarter. 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, GROUPON INC reported poor results of -$0.14 versus -$0.10 in the prior year. This year, the market expects an improvement in earnings ($0.11 versus -$0.14).
  • Compared to its closing price of one year ago, GRPN's share price has jumped by 27.55%, exceeding the performance of the broader market during that same time frame. Regarding the future course of this stock, we feel that the risks involved in investing in GRPN do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
  • You can view the full analysis from the report here: GRPN Ratings Report

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