NEW YORK ( TheStreet) -- Patriot Coal Corporation (NYSE: PCX) has been downgraded by TheStreet Ratings from hold to sell. 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, poor profit margins and generally disappointing historical performance in the stock itself. Highlights from the ratings report include:
- PATRIOT COAL CORP's earnings per share declined by 5.9% in the most recent quarter compared to 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, PATRIOT COAL CORP swung to a loss, reporting -$0.53 versus $1.50 in the prior year. For the next year, the market is expecting a contraction of 126.4% in earnings (-$1.20 versus -$0.53).
- 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 Oil, Gas & Consumable Fuels industry. The net income has decreased by 7.7% when compared to the same quarter one year ago, dropping from -$45.99 million to -$49.52 million.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, PATRIOT COAL CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for PATRIOT COAL CORP is currently extremely low, coming in at 5.10%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -8.40% is significantly below that of the industry average.
- Looking at the price performance of PCX's shares over the past 12 months, there is not much good news to report: the stock is down 25.53%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than 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.