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NEW YORK (TheStreet) -- Regional Management (RM) 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 REGIONAL MANAGEMENT CORP (RM) 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, disappointing return on equity, poor profit margins, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."
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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 Consumer Finance industry. The net income has significantly decreased by 80.7% when compared to the same quarter one year ago, falling from $7.24 million to $1.40 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. When compared to other companies in the Consumer Finance industry and the overall market, REGIONAL MANAGEMENT CORP's return on equity is below that of both the industry average and the S&P 500.
- The gross profit margin for REGIONAL MANAGEMENT CORP is rather low; currently it is at 17.93%. It has decreased significantly from the same period last year. Along with this, the net profit margin of 2.59% significantly trails 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 57.37%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 80.35% 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.
- REGIONAL MANAGEMENT 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 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, REGIONAL MANAGEMENT CORP increased its bottom line by earning $2.24 versus $1.95 in the prior year. For the next year, the market is expecting a contraction of 45.1% in earnings ($1.23 versus $2.24).
- You can view the full analysis from the report here: RM Ratings Report