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NEW YORK (
) has been reiterated by TheStreet Ratings as a sell with a ratings score of D+. Among the areas we feel are negative, one of the most important has been premium valuation based on our review of its current price compared to such things as earnings and book value.
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Highlights from the ratings report include:
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Internet Software & Services industry and the overall market, LINKEDIN CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- The gross profit margin for LINKEDIN CORP is currently very high, coming in at 86.45%. Regardless of LNKD's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, LNKD's net profit margin of 1.02% is significantly lower than the industry average.
- Compared to its closing price of one year ago, LNKD's share price has jumped by 123.31%, exceeding the performance of the broader market during that same time frame. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
- LINKEDIN CORP reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, LINKEDIN CORP increased its bottom line by earning $0.19 versus $0.11 in the prior year. This year, the market expects an improvement in earnings ($1.53 versus $0.19).
LinkedIn Corporation operates an online professional network. LinkedIn has a market cap of $22.0 billion and is part of the technology sector and internet industry. Shares are up 104% year to date as of the close of trading on Friday.
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--Written by a member of TheStreet Ratings Staff.