Will This Analyst Downgrade Hurt Trulia (TRLA) Stock Today?

NEW YORK (TheStreet) -- RBC Capital Markets downgraded Trulia  (TRLA) to "sector perform" from "outperform" and set a $45 price target based on valuation.

The stock closed at $45.10 on Wednesday.

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

----------

Separately, TheStreet Ratings team rates TRULIA INC as a "sell" with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

"We rate TRULIA INC (TRLA) a SELL. This is driven by several 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 deteriorating net income and feeble growth in its earnings per share."

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 Internet Software & Services industry. The net income has significantly decreased by 664.4% when compared to the same quarter one year ago, falling from -$1.98 million to -$15.15 million.
  • TRULIA 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. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, TRULIA INC reported poor results of -$0.50 versus -$0.12 in the prior year. This year, the market expects an improvement in earnings (-$0.37 versus -$0.50).
  • TRLA's debt-to-equity ratio of 0.61 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 6.96 is very high and demonstrates very strong liquidity.
  • Compared to other companies in the Internet Software & Services industry and the overall market, TRULIA INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for TRULIA INC is currently very high, coming in at 92.95%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -27.80% is in-line with the industry average.
  • You can view the full analysis from the report here: TRLA Ratings Report

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

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.

If you liked this article you might like

Obama Senior Advisor Jarrett Joins Lyft's Board

Doug Kass -- Beware of Facebook's Earnings GAAP

Avoid Zillow Until Concerns About Its Business Model Are Resolved

Plotting Strategy on Zillow

Plotting Strategy on Zillow

Cramer: Trulia Deal Shows Zillow CEO Has Many 'Irons in the Fire'