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NEW YORK (TheStreet) -- Iao Kun Group Holding (IKGH) has been downgraded by TheStreet Ratings from Hold to Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate IAO KUN GROUP HOLDING CO LTD (IKGH) a SELL. This is driven by a few notable 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 feeble growth in its earnings per share, deteriorating net income, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- IAO KUN GROUP HOLDING CO LTD 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. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, IAO KUN GROUP HOLDING CO LTD reported lower earnings of $0.12 versus $1.65 in the prior year. For the next year, the market is expecting a contraction of 8.3% in earnings ($0.11 versus $0.12).
- 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 Hotels, Restaurants & Leisure industry. The net income has significantly decreased by 276.7% when compared to the same quarter one year ago, falling from $6.93 million to -$12.25 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, IAO KUN GROUP HOLDING CO LTD's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has decreased to $27.46 million or 27.26% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, IAO KUN GROUP HOLDING CO LTD has marginally lower results.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 45.57%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 281.81% compared to the year-earlier quarter. 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: IKGH Ratings Report