NEW YORK (TheStreet) -- Shares of foreign-exchange brokerage FXCM (FXCM) cratered nearly 90% to a 52-week low of $1.47 in morning trading Tuesday after the company disclosed the terms of its bailout by Leucadia National (LUK) .
Leucadia can force a sale of FXCM and is entitled to at least 50% of the proceeds beyond payment of a $300 million loan and other fees, FXCM said in a statement late Monday. The annual interest rate on the two-year loan can climb to as much as 17% from the original 10%.
FXCM has been hamstrung by Switzerland's central bank unexpected decision last week to scrap a cap on the franc-euro rate, which triggered a 20% drop in the euro compared to the franc.
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Separately, TheStreet Ratings team rates FXCM INC as a "hold" with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate FXCM INC (FXCM) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, disappointing return on equity and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- FXCM's revenue growth has slightly outpaced the industry average of 0.2%. Since the same quarter one year prior, revenues slightly increased by 2.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Capital Markets industry. The net income increased by 146.7% when compared to the same quarter one year prior, rising from -$5.12 million to $2.39 million.
- FXCM INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, FXCM INC increased its bottom line by earning $0.48 versus $0.38 in the prior year. For the next year, the market is expecting a contraction of 30.0% in earnings ($0.34 versus $0.48).
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Capital Markets industry and the overall market on the basis of return on equity, FXCM INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
- The gross profit margin for FXCM INC is rather low; currently it is at 22.33%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 2.06% significantly trails the industry average.
- You can view the full analysis from the report here: FXCM Ratings Report