Editors' Pick: Originally published Jan. 21.
With small-cap stocks taking a beating this month -- the Russell 2000 Index is down 12% this year, compared with the S&P 500's 9% dip -- some of the worst performers include companies in the shipping, biotech and, of course, energy sectors.
Oppenheimer analysts noted this week that investors are better off buying large-cap growth stocks that have been oversold than small-cap value stocks that are seeing a bump.
The 10 small-cap stocks on the following pages are the worst-performing stocks among the Russell 2000 year to date. We've paired the list with commentary from Jim Cramer, if the stock is owned by his Action Alerts PLUS Charitable Trust Portfolio, or ratings from TheStreet Ratings, TheStreet's proprietary ratings tool, for another perspective.
When you're done, be sure to also check out the small-cap stocks with the best performance this year.
TheStreet Ratings uses a quantitative approach to rating over 4,300 stocks to predict return potential for the next year. The model is both objective, using elements such as volatility of past operating revenues, financial strength, and company cash flows, and subjective, including expected equity market returns, future interest rates, implied industry outlook and forecasted company earnings.
10. Eagle Bulk Shipping
Market Cap: $60 million
2016 Return: -54.8%
TheStreet Said: Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
"We rate Eagle Bulk Shipping as a sell with a ratings score of D-. This is driven by some concerns, 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 an overall disappointing return on equity."
Highlights from the analysis by TheStreet Ratings team include:
- 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 Marine industry and the overall market, Eagle Bulk Shipping's return on equity significantly trails that of both the industry average and the S&P 500.
- Eagle Bulk Shipping reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, Eagle Bulk Shipping reported poor results of -$17.79 versus -$4.16 in the prior year.
- Despite the weak revenue results, Eagle Bulk Shipping has outperformed against the industry average of 15.7%. Since the same quarter one year prior, revenues slightly dropped by 2.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- The current debt-to-equity ratio, 0.38, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 1.00 is somewhat weak and could be cause for future problems.
- Net operating cash flow has increased to -$6.48 million or 44.55% when compared to the same quarter last year. Despite an increase in cash flow, Eagle Bulk Shipping's average is still marginally south of the industry average growth rate of 48.74%.
- You can view the full analysis from the report here: EGLE