GAIN Capital Holdings Inc Stock Downgraded (GCAP)

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) -- GAIN Capital Holdings (NYSE: GCAP) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself.

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Highlights from the ratings report include:
  • Although GCAP's debt-to-equity ratio of 0.28 is very low, it is currently higher than that of the industry average.
  • GCAP, with its decline in revenue, underperformed when compared the industry average of 11.3%. Since the same quarter one year prior, revenues slightly dropped by 4.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • 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 Diversified Financial Services industry. The net income has significantly decreased by 130.3% when compared to the same quarter one year ago, falling from $17.16 million to -$5.20 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Diversified Financial Services industry and the overall market on the basis of return on equity, GAIN CAPITAL HOLDINGS INC underperformed against that of the industry average and is significantly less than that of the S&P 500.

GAIN Capital Holdings, Inc., together with its subsidiaries, provides trading services and solutions to retail and institutional customers worldwide. GAIN has a market cap of $266.9 million and is part of the financial sector and financial services industry. Shares are down 16% year to date as of the close of trading on Wednesday.

You can view the full GAIN Ratings Report or get investment ideas from our investment research center.

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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