LinkedIn Corp's Sell Recommendation Supported

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) -- LinkedIn (NYSE: LNKD) has been reiterated by TheStreet Ratings as a sell with a ratings score of D+. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income and disappointing return on equity.

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 Internet Software & Services industry. The net income has significantly decreased by 67.1% when compared to the same quarter one year ago, falling from $11.51 million to $3.78 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 Internet Software & Services industry and the overall market, LINKEDIN CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Compared to where it was a year ago, the stock is now trading at a higher level, and has traded in line with the S&P 500. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry, implying reduced upside potential.
  • The gross profit margin for LINKEDIN CORP is currently very high, coming in at 87.06%. Regardless of LNKD's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, LNKD's net profit margin of 0.84% is significantly lower than the industry average.
  • LINKEDIN CORP 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. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, LINKEDIN CORP increased its bottom line by earning $0.23 versus $0.19 in the prior year. This year, the market expects an improvement in earnings ($1.51 versus $0.23).

LinkedIn Corporation operates an online professional network. LinkedIn has a market cap of $19.3 billion and is part of the technology sector and internet industry. Shares are down 14.2% year to date as of the close of trading on Friday.

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

--Written by a member of TheStreet Ratings Staff.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

null

More from Markets

Global Stocks Hit by Asia Tech Weakness, Oil Price Rally; U.S. Futures Slip

Global Stocks Hit by Asia Tech Weakness, Oil Price Rally; U.S. Futures Slip

General Electric, Honeywell, Wells Fargo and Qualcomm - 5 Things You Must Know

General Electric, Honeywell, Wells Fargo and Qualcomm - 5 Things You Must Know

Ericsson Rockets After Solid Q1 Following Cevian Push to Accelerate Turnaround

Ericsson Rockets After Solid Q1 Following Cevian Push to Accelerate Turnaround

Skechers Shares Are Crashing Pre-Market

Skechers Shares Are Crashing Pre-Market

P&G, GE and IBM Need to Innovate; Has Starbucks' Stock Grown Ice Cold?--ICYMI

P&G, GE and IBM Need to Innovate; Has Starbucks' Stock Grown Ice Cold?--ICYMI