NEW YORK (TheStreet) -- Shares of Vapor Corp. (VPCO) are down 20.10% to $1.99 after the electronic cigarette company released preliminary 2014 third quarter and nine months information about financial results set to be released after the market closes on Friday, November 14.
Expected net sales are $2,673,926 and $13,547,792 for the three and nine months ended September 30, respectively, which represent decreases of 58.3% and 28.5%, respectively compared to the prior year periods, the company said.
"The decrease in sales is primarily attributable to decreased sales of the company's television direct marketing campaign for the company's Alternacig and VaporX branded campaigns and decreases in sales from our on-line stores," the company said.
The decrease in sales is also attributable to "distributor inventory build leveling off in 2014 and continued pipeline load in the e-cigarette category in 2013, and the increasing prevalence of vaporizers, tanks and open system vapor products that are marginalizing the e-cigarette category," the company added.
Additionally, Vapor Corp. announced today that it has executed a binding term sheet to enter into a merger with Vaporin Inc. (VAPO) , a company whose primary focus is in vaporizers and eliquids.
Shares of Vaporin are up 27.5% to $2.55.
Separately, TheStreet Ratings team rates VAPOR CORP/NV as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate VAPOR CORP/NV (VPCO) 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 deteriorating net income, poor profit margins, weak operating cash flow 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 Tobacco industry. The net income has significantly decreased by 1810.9% when compared to the same quarter one year ago, falling from -$0.06 million to -$1.05 million.
- The gross profit margin for VAPOR CORP/NV is currently lower than what is desirable, coming in at 25.31%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -17.28% is significantly below that of the industry average.
- Net operating cash flow has significantly decreased to -$0.59 million or 1693.93% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- VAPOR CORP/NV's earnings have gone downhill when comparing its most recently reported quarter with the same quarter a year earlier. 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, VAPOR CORP/NV turned its bottom line around by earning $0.03 versus -$0.10 in the prior year. For the next year, the market is expecting a contraction of 600.0% in earnings (-$0.15 versus $0.03).
- This stock's share value has moved by only 52.50% over the past year. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- You can view the full analysis from the report here: VPCO Ratings Report