NEW YORK (
-- BGC Partners
) has been downgraded by TheStreet Ratings from buy to hold. Among the primary strengths of the company is its revenue growth. At the same time, however, we also find weaknesses including deteriorating net income, generally poor debt management and disappointing return on equity.
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Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 24.3%. Since the same quarter one year prior, revenues rose by 23.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- BGC PARTNERS 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 two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, BGC PARTNERS INC reported lower earnings of $0.19 versus $0.23 in the prior year. This year, the market expects an improvement in earnings ($0.69 versus $0.19).
- 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 Capital Markets industry. The net income has significantly decreased by 79.7% when compared to the same quarter one year ago, falling from $9.66 million to $1.96 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 Capital Markets industry and the overall market on the basis of return on equity, BGC PARTNERS INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
- The gross profit margin for BGC PARTNERS INC is currently extremely low, coming in at 5.60%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.40% significantly trails the industry average.
BGC Partners, Inc. operates as a brokerage company, primarily servicing the wholesale financial markets. The company has a P/E ratio of 40.6, above the average financial services industry P/E ratio of 37.9 and above the S&P 500 P/E ratio of 17.7. BGC has a market cap of $600.5 million and is part of the
industry. Shares are down 12.5% year to date as of the close of trading on Friday.
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-- Written by a member of TheStreet Ratings Staff
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.