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) -- Cresud (Nasdaq: CRESY) 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 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 Real Estate Management & Development industry. The net income has significantly decreased by 314.4% when compared to the same quarter one year ago, falling from $15.92 million to -$34.12 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 Real Estate Management & Development industry and the overall market on the basis of return on equity, CRESUD SACIFYA underperformed against that of the industry average and is significantly less than that of the S&P 500.
- CRESUD SACIFYA 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. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, CRESUD SACIFYA swung to a loss, reporting -$0.09 versus $0.31 in the prior year. This year, the market expects an improvement in earnings (-$0.05 versus -$0.09).
- In its most recent trading session, CRESY has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Regardless of the rise in share value over the previous year, we feel that the risks involved in investing in this stock do not compensate for any future upside potential.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 38.3%. Since the same quarter one year prior, revenues fell by 37.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.