10 Worst-Performing Small-Cap Stocks in 2016

Editors' Pick: Originally published Jan. 21.

With small-cap stocks taking a beating this month -- the Russell 2000 Index is down 12% this year, compared with the S&P 500's 9% dip -- some of the worst performers include companies in the shipping, biotech and, of course, energy sectors.

Oppenheimer analysts noted this week that investors are better off buying large-cap growth stocks that have been oversold than small-cap value stocks that are seeing a bump.

The 10 small-cap stocks on the following pages are the worst-performing stocks among the Russell 2000 year to date. We've paired the list with commentary from Jim Cramer, if the stock is owned by his Action Alerts PLUS Charitable Trust Portfolio, or ratings from TheStreet Ratings, TheStreet's proprietary ratings tool, for another perspective.

When you're done, be sure to also check out the small-cap stocks with the best performance this year. 

TheStreet Ratings uses a quantitative approach to rating over 4,300 stocks to predict return potential for the next year. The model is both objective, using elements such as volatility of past operating revenues, financial strength, and company cash flows, and subjective, including expected equity market returns, future interest rates, implied industry outlook and forecasted company earnings.

 

 

 

 

 

 

 

10. Eagle Bulk Shipping
10. Eagle Bulk Shipping

(EGLE)
Industrials/Marine
Market Cap: $60 million
2016 Return: -54.8%

TheStreet Said: 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 Eagle Bulk Shipping as a sell with a ratings score of D-. 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. Among the areas we feel are negative, one of the most important has been an overall disappointing return on equity."

Highlights from the analysis by TheStreet Ratings team include:

  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Marine industry and the overall market, Eagle Bulk Shipping's return on equity significantly trails that of both the industry average and the S&P 500.
  • Eagle Bulk Shipping reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, Eagle Bulk Shipping reported poor results of -$17.79 versus -$4.16 in the prior year.
  • Despite the weak revenue results, Eagle Bulk Shipping has outperformed against the industry average of 15.7%. Since the same quarter one year prior, revenues slightly dropped by 2.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The current debt-to-equity ratio, 0.38, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 1.00 is somewhat weak and could be cause for future problems.
  • Net operating cash flow has increased to -$6.48 million or 44.55% when compared to the same quarter last year. Despite an increase in cash flow, Eagle Bulk Shipping's average is still marginally south of the industry average growth rate of 48.74%.
  • You can view the full analysis from the report here: EGLE

9. Peabody Energy
9. Peabody Energy

BTU
Energy/Coal & Consumable Fuels
Market Cap: $63.7 million
2016 Return: -55%

TheStreet Said: 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 Peabody Energy as a sell with a ratings score of D. This is driven by multiple 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 deteriorating net income, generally high debt management risk, disappointing return on equity, poor profit margins and weak operating cash flow."

Highlights from the analysis by TheStreet Ratings team include:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 102.3% when compared to the same quarter one year ago, falling from -$150.60 million to -$304.70 million.
  • The debt-to-equity ratio is very high at 4.83 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.46, which clearly demonstrates the inability to cover short-term cash needs.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, Peabody Energy's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for Peabody Energy is currently extremely low, coming in at 11.62%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -21.47% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$34.20 million or 119.56% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • You can view the full analysis from the report here: BTU

8. Republic Airways
8. Republic Airways

(RJET)
Industrials/Airlines
Market Cap: $86.7 million
2016 Return: -56.7%

TheStreet Said: 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 Republic Airways as a hold with a ratings score of C-. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its attractive valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity."

Highlights from the analysis by TheStreet Ratings team include:

  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 5.3%. Since the same quarter one year prior, revenues slightly dropped by 2.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • 38.62% is the gross profit margin for Republic Airways which we consider to be strong. Regardless of Republic Airways' high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, Republic Airways' net profit margin of 0.85% is significantly lower than the industry average.
  • The debt-to-equity ratio is very high at 3.74 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, Republic Airways has a quick ratio of 0.59, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • 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. In comparison to the other companies in the Airlines industry and the overall market, Republic Airways' return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • You can view the full analysis from the report here: RJET

7. OncoCyte
7. OncoCyte

(OCX)
Health Care/Biotechnology
Market Cap: $66.7 million
2016 Return: -56.8%

There is no TheStreet Ratings data for OncoCyte at this time. 

6. Safe Bulkers
6. Safe Bulkers

(SB)
Industrials/Marine
Market Cap: $28.8 million
2016 Return: -57.4%

TheStreet Said: 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 Safe Bulkers as a sell with a ratings score of D+. 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 feeble growth in its earnings per share, deteriorating net income, disappointing return on equity and generally disappointing historical performance in the stock itself."

Highlights from the analysis by TheStreet Ratings team include:

  • Safe Bulkers 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. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, Safe Bulkers reported lower earnings of $0.07 versus $1.05 in the prior year. For the next year, the market is expecting a contraction of 642.9% in earnings (-$0.38 versus $0.07).
  • 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 Marine industry. The net income has significantly decreased by 610.5% when compared to the same quarter one year ago, falling from $1.48 million to -$7.55 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Marine industry and the overall market, Safe Bulkers' return on equity significantly trails that of both the industry average and the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 89.64%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 550.00% 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.
  • SB's debt-to-equity ratio of 0.94 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further.
  • You can view the full analysis from the report here: SB

5. Scorpio Bulkers
5. Scorpio Bulkers

(SALT)
Industrials/Marine
Market Cap: $105.6 million
2016 Return: -62.6%

TheStreet Said: 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 Scorpio Bulkers as a sell with a ratings score of D-. This is driven by several 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 disappointing return on equity and generally disappointing historical performance in the stock itself."

Highlights from the analysis by TheStreet Ratings team include:

  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Marine industry and the overall market, Scorpio Bulkers' return on equity significantly trails that of both the industry average and the S&P 500.
  • SALT's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 84.53%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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.
  • Scorpio Bulkers reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. 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, Scorpio Bulkers reported poor results of -$9.72 versus -$0.36 in the prior year. This year, the market expects an improvement in earnings (-$3.36 versus -$9.72).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Marine industry average. The net income increased by 4.5% when compared to the same quarter one year prior, going from -$18.91 million to -$18.05 million.
  • Net operating cash flow has significantly increased by 68.46% to -$5.31 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 48.74%.
  • You can view the full analysis from the report here: SALT

4. Halcon Resources
4. Halcon Resources

(HK)
Energy/Oil & Gas Exploration & Production
Market Cap: $56.2 million
2016 Return: -63.1%

TheStreet Said: 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 Halcon Resources as a sell with a ratings score of D. 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 disappointing return on equity, weak operating cash flow, generally disappointing historical performance in the stock itself, generally high debt management risk and feeble growth in its earnings per share."

Highlights from the analysis by TheStreet Ratings team include:

  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, Halcon Resources' return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $114.66 million or 32.92% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, Halcon Resources has marginally lower results.
  • The debt-to-equity ratio is very high at 6.58 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, HK's quick ratio is somewhat strong at 1.17, demonstrating the ability to handle short-term liquidity needs.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 92.27%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 50.00% 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.
  • Halcon Resources' earnings per share declined by 50.0% in the most recent quarter compared to 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, Halcon Resources turned its bottom line around by earning $2.35 versus -$15.55 in the prior year. For the next year, the market is expecting a contraction of 83.0% in earnings ($0.40 versus $2.35).
  • You can view the full analysis from the report here: HK

3. C&J Energy Services
3. C&J Energy Services

(CJES)
Energy/Oil & Gas Equipment & Services
Market Cap: $194 million
2016 Return: -64%

TheStreet Said: 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 C&J Energy Services as a sell with a ratings score of D. This is driven by several 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 deteriorating net income, generally high debt management risk, disappointing return on equity, poor profit margins and weak operating cash flow."

Highlights from the analysis by TheStreet Ratings team include:

  • 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 Energy Equipment & Services industry. The net income has significantly decreased by 2010.5% when compared to the same quarter one year ago, falling from $23.82 million to -$455.02 million.
  • The debt-to-equity ratio of 1.19 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, C&J Energy Services maintains a poor quick ratio of 0.96, which illustrates the inability to avoid short-term cash problems.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Energy Equipment & Services industry and the overall market, C&J Energy Services' return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for C&J Energy Services is currently extremely low, coming in at 9.74%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -106.43% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$0.80 million or 101.95% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • You can view the full analysis from the report here: CJES

2. Sarepta Therapeutics
2. Sarepta Therapeutics

(SRPT)
Health Care/Biotechnology
Market Cap: $541.2 million
2016 Return: -68.4%

There is no TheStreet Ratings data for Sarepta Therapeutics at this time.

  

1. Horsehead Holdings
1. Horsehead Holdings

(ZINC)
Materials/Diversified Metals & Mining
Market Cap: $29 million
2016 Return: -75%

TheStreet Said: 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 Horsehead Holdings 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, disappointing return on equity and generally disappointing historical performance in the stock itself."

Highlights from the analysis by TheStreet Ratings team include:

  • Horsehead Holdings 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. Stable earnings per share over the past year indicate the company has managed its earnings and share float. We anticipate this stability to falter in the coming year and, in turn, the company to deliver lower earnings per share than prior full year. During the past fiscal year, Horsehead Holdings reported poor results of -$0.31 versus -$0.30 in the prior year. For the next year, the market is expecting a contraction of 303.2% in earnings (-$1.25 versus -$0.31).
  • 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 Metals & Mining industry. The net income has significantly decreased by 290.5% when compared to the same quarter one year ago, falling from -$7.01 million to -$27.38 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 Metals & Mining industry and the overall market, Horsehead Holdings' return on equity significantly trails that of both the industry average and the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 95.61%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 242.85% 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.
  • Horsehead Holdings' debt-to-equity ratio of 0.93 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.86 is weak.
  • You can view the full analysis from the report here: ZINC

 

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