NEW YORK (TheStreet) -- RadioShack (RSH) shares are down -10.1% to $1.10 in trading on Thursday, compounding the drop the stock has been experiencing all week.
RadioShack shares have fallen-16.9% since Monday on speculation from ratings firms that the company may be close to bankruptcy.
Analysts at Raymond James (RJF - Get Report) significantly lowered its full year EPS guidance for the company to a loss of $4.05 from a loss of $1.83 per share.
Also, analysts at B. Riley lowered the company's price target to $0, stating that the company's chances of filing for bankruptcy are 50%.
TheStreet Ratings team rates RADIOSHACK CORP as a Sell with a ratings score of D-. TheStreet Ratings Team has this to say about their recommendation:
"We rate RADIOSHACK CORP (RSH) 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, generally high debt management risk, disappointing return on equity, poor profit margins and weak operating cash flow."
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 significantly underperformed when compared to that of the S&P 500 and the Specialty Retail industry. The net income has significantly decreased by 202.4% when compared to the same quarter one year ago, falling from -$63.30 million to -$191.40 million.
- The debt-to-equity ratio is very high at 2.98 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, RSH maintains a poor quick ratio of 0.78, 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 Specialty Retail industry and the overall market, RADIOSHACK CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for RADIOSHACK CORP is currently lower than what is desirable, coming in at 29.88%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -20.46% is significantly below that of the industry average.
- Net operating cash flow has significantly decreased to -$139.80 million or 85.41% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: RSH Ratings Report