NEW YORK ( TheStreet) -- Exide Technologies (Nasdaq: XIDE) 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 weak debt management, disappointing return on equity, poor profit margins and generally disappointing historical performance in the stock itself.
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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 Auto Components industry. The net income has significantly decreased by 1951.2% when compared to the same quarter one year ago, falling from -$5.19 million to -$106.50 million.
- The debt-to-equity ratio is very high at 2.86 and currently higher than the industry average, implying that there is very poor management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, XIDE maintains a poor quick ratio of 0.85, which illustrates the inability to avoid short-term cash problems.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Auto Components industry and the overall market, EXIDE TECHNOLOGIES's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for EXIDE TECHNOLOGIES is rather low; currently it is at 16.50%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -15.40% is significantly below that of the industry average.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 44.16%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 1871.42% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
-- Written by a member of TheStreet Ratings Staff