NEW YORK ( TheStreet) -- XO Group (NYSE: XOXO) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and revenue growth. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year. Highlights from the ratings report include:
- XO 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 two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, XO GROUP INC increased its bottom line by earning $0.21 versus $0.10 in the prior year. This year, the market expects an improvement in earnings ($0.29 versus $0.21).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet Software & Services industry. The net income increased by 156.3% when compared to the same quarter one year prior, rising from -$0.71 million to $0.40 million.
- The gross profit margin for XO GROUP INC is currently very high, coming in at 83.70%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, XOXO's net profit margin of 1.30% significantly trails the industry average.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Internet Software & Services industry and the overall market, XO GROUP INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- XOXO has underperformed the S&P 500 Index, declining 11.54% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
-- Written by a member of TheStreet Ratings Staff