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"We rate INNODATA INC (INOD) a SELL. This is driven by a number of negative factors, 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 unimpressive growth in net income, poor profit margins, 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 IT Services industry. The net income has significantly decreased by 132.5% when compared to the same quarter one year ago, falling from $0.86 million to -$0.28 million.
- The gross profit margin for INNODATA INC is currently lower than what is desirable, coming in at 32.51%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -1.76% is significantly below that of the industry average.
- The share price of INNODATA INC has not done very well: it is down 17.34% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- INNODATA 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. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, INNODATA INC continued to lose money by earning -$0.04 versus -$0.43 in the prior year. For the next year, the market is expecting a contraction of 100.0% in earnings (-$0.08 versus -$0.04).
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the IT Services industry and the overall market, INNODATA INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: INOD Ratings Report