Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link. NEW YORK ( TheStreet) -- Energy Company of Minas Gerais (NYSE: CIG) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, poor profit margins, generally disappointing historical performance in the stock itself 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 Electric Utilities industry. The net income has significantly decreased by 60.4% when compared to the same quarter one year ago, falling from $615.23 million to $243.44 million.
- The gross profit margin for CIA ENERGETICA DE MINAS is currently lower than what is desirable, coming in at 26.45%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 17.33% is above that of the industry average.
- The share price of CIA ENERGETICA DE MINAS has not done very well: it is down 16.56% 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.
- CIA ENERGETICA DE MINAS has experienced 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, CIA ENERGETICA DE MINAS increased its bottom line by earning $4.10 versus $2.39 in the prior year. For the next year, the market is expecting a contraction of 71.0% in earnings ($1.19 versus $4.10).
- CIG, with its very weak revenue results, has greatly underperformed against the industry average of 14.4%. Since the same quarter one year prior, revenues plummeted by 67.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.