NEW YORK ( TheStreet) -- Charm Communications (Nasdaq: CHRM) 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, generally disappointing historical performance in the stock itself, poor profit margins and feeble growth in its earnings per share.
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- 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 Media industry. The net income has significantly decreased by 93.0% when compared to the same quarter one year ago, falling from $7.87 million to $0.55 million.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 52.29%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 94.73% compared to 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.
- The gross profit margin for CHARM COMMUNICATIONS INC is currently lower than what is desirable, coming in at 29.30%. Regardless of CHRM's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 1.60% trails the industry average.
- CHARM COMMUNICATIONS 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. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, CHARM COMMUNICATIONS INC increased its bottom line by earning $1.12 versus $0.94 in the prior year. For the next year, the market is expecting a contraction of 19.6% in earnings ($0.90 versus $1.12).
- 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. In comparison to the other companies in the Media industry and the overall market, CHARM COMMUNICATIONS INC's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
-- Written by a member of TheStreet Ratings Staff