NEW YORK (TheStreet) -- Jumei (JMEI) - Get Jumei International Holding Ltd Sponsored ADR Class A Report stock is slumping 3.53% to $9.83 in afternoon trading on Monday as many U.S. traded China-based stocks fall after China shares declined by their greatest amount in a month.
Jumei is an online retailer of beauty products based in Beijing.
The Shanghai Composite Index closed down 2.59% to $3,533.78 as a sixth consecutive monthly decline of industrial profits in November and a change to the system for initial public offerings (IPOs) weighed on shares.
The revisions to the system for IPOs could go into effect as early as March, and might move China toward a registration system and away from an approval-based system, according to Reuters. Investors are fearful that the changes could lower demand for existing equities.
Also negatively impacting shares, China's foreign-exchange regulator plans to require banks to increase supervision regarding cash settlements in foreign currencies, the Wall Street Journal reports.
Separately, recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate JUMEI INTL HOLDING LTD -ADR as a Sell with a ratings score of D. This is driven by a few notable weaknesses, 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 feeble growth in its earnings per share, deteriorating net income, poor profit margins and generally disappointing historical performance in the stock itself.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- JUMEI INTL HOLDING LTD -ADR 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. For the next year, the market is expecting a contraction of 52.0% in earnings ($0.22 versus $0.45).
- 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 170.1% when compared to the same quarter one year ago, falling from $19.50 million to -$13.68 million.
- The gross profit margin for JUMEI INTL HOLDING LTD -ADR is currently lower than what is desirable, coming in at 26.17%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -4.47% trails that of the industry average.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 33.54%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 169.23% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- When compared to other companies in the Internet & Catalog Retail industry and the overall market, JUMEI INTL HOLDING LTD -ADR's return on equity is below that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: JMEI