NEW YORK (
) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself, feeble growth in its earnings per share, deteriorating net income and disappointing return on equity.
Highlights from the ratings report include:
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 33.77%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 163.63% compared to the year-earlier quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, KBW is still more expensive than most of the other companies in its industry.
- KBW 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. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, KBW INC reported lower earnings of $0.64 versus $0.66 in the prior year. For the next year, the market is expecting a contraction of 50.8% in earnings ($0.32 versus $0.64).
- 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 152.1% when compared to the same quarter one year ago, falling from $8.16 million to -$4.25 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, KBW INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
- The revenue fell significantly faster than the industry average of 1.5%. Since the same quarter one year prior, revenues fell by 39.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
KBW, Inc., through its subsidiaries, operates as an investment bank specializing in the financial services industry in the United States and Europe. The company has a P/E ratio of 84.2, below the average financial services industry P/E ratio of 89.4 and above the S&P 500 P/E ratio of 17.7. KBW has a market cap of $500.5 million and is part of the
industry. Shares are down 48.7% year to date as of the close of trading on Thursday.
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