Knight Capital Group Inc. Stock Downgraded (KCG)

NEW YORK ( TheStreet) -- Knight Capital Group (NYSE: KCG) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including generally poor debt management and poor profit margins.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 43.6%. Since the same quarter one year prior, revenues rose by 31.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • KNIGHT CAPITAL GROUP INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, KNIGHT CAPITAL GROUP INC increased its bottom line by earning $1.24 versus $0.98 in the prior year. This year, the market expects an improvement in earnings ($1.38 versus $1.24).
  • The gross profit margin for KNIGHT CAPITAL GROUP INC is currently lower than what is desirable, coming in at 25.90%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 11.80% trails the industry average.
  • The debt-to-equity ratio is very high at 2.97 and currently higher than the industry average, implying that there is very poor management of debt levels within the company.
.

Knight Capital Group, Inc., a financial services company, provides access to the capital markets across multiple asset classes to buy-and sell-side firms, and corporations, as well as offers capital markets services to corporate issuers and private companies primarily in the United States. The company has a P/E ratio of 10.9, below the average financial services industry P/E ratio of 11.1 and below the S&P 500 P/E ratio of 17.7. Knight Capital Group has a market cap of $1.33 billion and is part of the financial sector and financial services industry. Shares are up 12.7% year to date as of the close of trading on Monday.

You can view the full Knight Capital Group Ratings Report or get investment ideas from our investment research center.
-- Written by a member of TheStreet Ratings Staff
null