RealD Inc. Stock Downgraded (RLD)

NEW YORK ( TheStreet) -- RealD (NYSE: RLD) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself, unimpressive growth in net income, premium valuation and feeble growth in its earnings per share.

Highlights from the ratings report include:
  • The share price of REALD INC has not done very well: it is down 18.61% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Electronic Equipment, Instruments & Components industry. The net income has significantly decreased by 69.0% when compared to the same quarter one year ago, falling from $9.60 million to $2.98 million.
  • REALD 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, REALD INC turned its bottom line around by earning $0.65 versus -$0.16 in the prior year. For the next year, the market is expecting a contraction of 37.7% in earnings ($0.41 versus $0.65).
  • The gross profit margin for REALD INC is rather high; currently it is at 57.50%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, RLD's net profit margin of 4.40% compares favorably to the industry average.

RealD Inc., together with its subsidiaries, licenses stereoscopic 3D technologies in the United States, Canada, and internationally. The company has a P/E ratio of 19.7, equal to the average media industry P/E ratio and above the S&P 500 P/E ratio of 17.7. RealD has a market cap of $698.2 million and is part of the services sector and media industry. Shares are up 58.2% year to date as of the close of trading on Tuesday.

You can view the full RealD Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

null

More from Markets

Replay: Jim Cramer on Tariffs, the Market Rally, Caterpillar and Micron

Replay: Jim Cramer on Tariffs, the Market Rally, Caterpillar and Micron

Video: When Planning for Retirement, Don't Underestimate Your Life Span

Video: When Planning for Retirement, Don't Underestimate Your Life Span

Video: Here's What May Come Next for Theranos Founder and CEO Elizabeth Holmes

Video: Here's What May Come Next for Theranos Founder and CEO Elizabeth Holmes

Charlie Gasparino Says GE Is Reportedly Looking to Slash Its Dividend Again

Charlie Gasparino Says GE Is Reportedly Looking to Slash Its Dividend Again

GE Confirms $11.1 Billion Transportation Merger With Wabtec

GE Confirms $11.1 Billion Transportation Merger With Wabtec