Hudson Global Inc Stock Downgraded (HSON)

Editor's Note: 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.

NEW YORK ( TheStreet) -- Hudson Global (Nasdaq: HSON) 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, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

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Highlights from the ratings report include:
  • 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 Professional Services industry. The net income has significantly decreased by 164.0% when compared to the same quarter one year ago, falling from $3.38 million to -$2.17 million.
  • 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 Professional Services industry and the overall market, HUDSON GLOBAL INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The share price of HUDSON GLOBAL INC has not done very well: it is down 7.22% 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. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • HUDSON GLOBAL 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, HUDSON GLOBAL INC turned its bottom line around by earning $0.34 versus -$0.17 in the prior year. For the next year, the market is expecting a contraction of 185.3% in earnings (-$0.29 versus $0.34).
  • HSON, with its decline in revenue, underperformed when compared the industry average of 5.9%. Since the same quarter one year prior, revenues fell by 23.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
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Hudson Global, Inc. provides specialized professional-level recruitment and related talent solutions worldwide. The company provides permanent recruitment services; and contract consulting services, including project management, interim management, and professional contract staffing services. The company has a P/E ratio of -72.5, below the S&P 500 P/E ratio of 17.7. Hudson Global has a market cap of $144.4 million and is part of the services sector and diversified services industry. Shares are down 8.8% year to date as of the close of trading on Wednesday.

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

-- Written by a member of TheStreet Ratings Staff

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