NEW YORK (
-- Cogo Group
) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.
Highlights from the ratings report include:
- 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 Communications Equipment industry. The net income has significantly decreased by 69.5% when compared to the same quarter one year ago, falling from $4.13 million to $1.26 million.
- 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 Communications Equipment industry and the overall market, COGO GROUP INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for COGO GROUP INC is currently extremely low, coming in at 6.80%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.70% significantly trails the industry average.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 65.00%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 72.72% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- COGO GROUP 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, COGO GROUP INC swung to a loss, reporting -$0.71 versus $0.44 in the prior year. This year, the market expects an improvement in earnings ($0.50 versus -$0.71).
Cogo Group, Inc. provides customized module design solutions for the digital media, telecommunications equipment, and industrial business end-markets in the People's Republic of China and internationally. The company has a P/E ratio of 9.6, below the S&P 500 P/E ratio of 17.7. Cogo Group has a market cap of $63.7 million and is part of the
industry. Shares are down 47.1% year to date as of the close of trading on Thursday.
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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.