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) -- MBIA (NYSE: MBI) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, generally high debt management risk and disappointing return on equity.
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- The debt-to-equity ratio is very high at 2.73 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
- 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. When compared to other companies in the Insurance industry and the overall market, MBIA INC's return on equity is below that of both the industry average and the S&P 500.
- MBIA INC 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. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, MBIA INC reported lower earnings of $1.10 versus $6.33 in the prior year. For the next year, the market is expecting a contraction of 80.9% in earnings ($0.21 versus $1.10).
- 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 Insurance industry. The net income has significantly decreased by 79.2% when compared to the same quarter one year ago, falling from $636.00 million to $132.00 million.
- MBI, with its decline in revenue, underperformed when compared the industry average of 13.6%. Since the same quarter one year prior, revenues fell by 37.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.