Why Cenveo (CVO) Stock Is Down In After-Hours Trading On Wednesday

NEW YORK (TheStreet) -- Shares of Cenveo Inc. (CVO) are down -$1.28% to $2.99 in after hours trading on Wednesday after the company reported a net loss of -24 cents per basic share for the 2014 first quarter, versus a net loss of -30 cents per basic share from the same period last year.

Cenveo said net sales increased to $490.1 million, from $418.6 million for the year ago quarter.

The diversified printing company said adjusted EBITDA for the most recent quarter was $36.8 million, compared to $33.5 million from the 2013 first quarter.

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TheStreet Ratings team rates CENVEO INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate CENVEO INC (CVO) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, poor profit margins and weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • 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 Commercial Services & Supplies industry. The net income has decreased by 1.6% when compared to the same quarter one year ago, dropping from -$56.74 million to -$57.68 million.
  • The gross profit margin for CENVEO INC is rather low; currently it is at 18.45%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -11.31% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to $10.44 million or 68.73% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • CENVEO INC reported flat earnings per share in the most recent quarter. 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, CENVEO INC reported poor results of -$1.34 versus -$1.27 in the prior year. This year, the market expects an improvement in earnings ($0.18 versus -$1.34).
  • Compared to its closing price of one year ago, CVO's share price has jumped by 53.00%, exceeding the performance of the broader market during that same time frame. Regarding the future course of this stock, we feel that the risks involved in investing in CVO do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
  • You can view the full analysis from the report here: CVO Ratings Report
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