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. TheStreet Ratings quantitative algorithm evaluates over 4,300 stocks on a daily basis by 32 different data factors and assigns a unique buy, sell, or hold recommendation on each stock. Click here to learn more.
"We rate RCS CAPITAL CORP (RCAP) a SELL. This is driven by some concerns, 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 weak operating cash flow, poor profit margins and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has significantly decreased to -$108.86 million or 468.00% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The gross profit margin for RCS CAPITAL CORP is rather low; currently it is at 15.30%. Regardless of RCAP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, RCAP's net profit margin of 7.55% is significantly lower than the industry average.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 38.02%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 35000.00% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- RCS CAPITAL CORP 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. This year, the market expects an improvement in earnings ($2.09 versus $0.10).
- Compared to other companies in the Capital Markets industry and the overall market, RCS CAPITAL CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: RCAP Ratings Report