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) -- Fibria Celulose (NYSE: FBR) 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, disappointing return on equity, weak operating cash flow 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 Paper & Forest Products industry. The net income has significantly decreased by 346.3% when compared to the same quarter one year ago, falling from $26.47 million to -$65.19 million.
- 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. Compared to other companies in the Paper & Forest Products industry and the overall market, FIBRIA CELULOSE SA's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has decreased to $256.74 million or 19.50% when compared to the same quarter last year. Despite a decrease in cash flow of 19.50%, FIBRIA CELULOSE SA is in line with the industry average cash flow growth rate of -21.06%.
- The share price of FIBRIA CELULOSE SA has not done very well: it is down 13.33% 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.
- FBR, with its decline in revenue, underperformed when compared the industry average of 4.1%. Since the same quarter one year prior, revenues fell by 21.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.