NEW YORK (TheStreet) -- Groupon (GRPN) - Get Groupon, Inc. Report shares are up 13.2% to $6.78 in early market trading on Friday after analysts at Credit Suisse raised its price target to $6.50 from $6.29, while maintaining its "neutral" rating on the e-commerce marketplace company.
The increased outlook is in response to Groupon's third quarter earnings results which saw the company report $757 million in revenue, in line with analysts' estimates, for a profit of 3 cents per diluted share that outpaced analysts' expectations by 2 cents.
"Groupon's active customers decreased to 52.7 million, mainly affected by the decrease in Rest of World. North America segment continued to see healthy growth, and added about 900k active customers," said analyst Stephen Ju.
TheStreet Ratings team rates GROUPON INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate GROUPON INC (GRPN) a SELL. 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. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."
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 Internet & Catalog Retail industry. The net income has significantly decreased by 202.0% when compared to the same quarter one year ago, falling from -$7.57 million to -$22.88 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 Internet & Catalog Retail industry and the overall market, GROUPON INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to -$22.75 million or 152.53% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 36.19%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 200.00% 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.
- GROUPON INC has experienced 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 year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, GROUPON INC reported poor results of -$0.14 versus -$0.10 in the prior year. This year, the market expects an improvement in earnings ($0.08 versus -$0.14).
- You can view the full analysis from the report here: GRPN Ratings Report