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NEW YORK (TheStreet) -- Five Star Quality Care (FVE) 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 FIVE STAR QUALITY CARE INC (FVE) a SELL. This is driven by a number of negative factors, 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, poor profit margins and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- FIVE STAR QUALITY CARE INC 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, FIVE STAR QUALITY CARE INC reported lower earnings of $0.07 versus $0.20 in the prior year. For the next year, the market is expecting a contraction of 128.6% in earnings (-$0.02 versus $0.07).
- 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 Health Care Providers & Services industry. The net income has significantly decreased by 296.8% when compared to the same quarter one year ago, falling from -$0.76 million to -$3.01 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 Health Care Providers & Services industry and the overall market, FIVE STAR QUALITY CARE INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for FIVE STAR QUALITY CARE INC is currently extremely low, coming in at 4.60%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -0.89% trails that of the industry average.
- The share price of FIVE STAR QUALITY CARE INC has not done very well: it is down 15.36% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when 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.
- You can view the full analysis from the report here: FVE Ratings Report