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) -- Imation (NYSE: IMN) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its poor profit margins, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.
- EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.
- The gross profit margin for IMATION CORP is rather low; currently it is at 21.91%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -9.78% is significantly below that of the industry average.
- Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, IMN has underperformed the S&P 500 Index, declining 16.59% from its price level of one year ago. 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.
- IMATION CORP's earnings per share declined by 5.1% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, IMATION CORP continued to lose money by earning -$0.61 versus -$8.73 in the prior year. For the next year, the market is expecting a contraction of 101.6% in earnings (-$1.23 versus -$0.61).
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Computers & Peripherals industry and the overall market, IMATION CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- IMN, with its decline in revenue, underperformed when compared the industry average of 4.3%. Since the same quarter one year prior, revenues fell by 20.3%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.