NEW YORK ( TheStreet) -- Youku (NYSE: YOKU) 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 and deteriorating net income. Highlights from the ratings report include:
- YOUKU INC -ADR's earnings per share declined by 16.7% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, YOUKU INC -ADR reported poor results of -$0.25 versus -$0.06 in the prior year. For the next year, the market is expecting a contraction of 30.0% in earnings (-$0.33 versus -$0.25).
- 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 Software & Services industry. The net income has significantly decreased by 34.4% when compared to the same quarter one year ago, falling from -$6.06 million to -$8.14 million.
- 44.20% is the gross profit margin for YOUKU INC -ADR which we consider to be strong. Regardless of YOKU's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, YOKU's net profit margin of -16.20% significantly underperformed when compared to the industry average.
- Compared to other companies in the Internet Software & Services industry and the overall market, YOUKU INC -ADR's return on equity significantly trails that of both the industry average and the S&P 500.
- Looking at the price performance of YOKU's shares over the past 12 months, there is not much good news to report: the stock is down 64.24%, 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.
-- Written by a member of TheStreet Ratings Staff