NEW YORK ( TheStreet) -- Investment Technology Group (NYSE: ITG) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share. Highlights from the ratings report include:
- INVESTMENT TECHNOLOGY GP 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. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, INVESTMENT TECHNOLOGY GP INC reported lower earnings of $0.54 versus $0.97 in the prior year. This year, the market expects an improvement in earnings ($0.75 versus $0.54).
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 29.31%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 2905.88% 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.
- The gross profit margin for INVESTMENT TECHNOLOGY GP INC is currently extremely low, coming in at 7.80%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -137.50% is significantly below that of the industry average.
- 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 Capital Markets industry and the overall market, INVESTMENT TECHNOLOGY GP INC's return on equity significantly trails that of both the industry average and the S&P 500.
- 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 2712.4% when compared to the same quarter one year ago, falling from $7.51 million to -$196.14 million.