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TheStreet Ratings team rates GAFISA SA as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate GAFISA SA (GFA) 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 feeble growth in its earnings per share, deteriorating net income, disappointing return on equity, poor profit margins and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- GAFISA SA 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. The company has suffered a declining pattern earnings per share over the past two years. During the past fiscal year, GAFISA SA swung to a loss, reporting -$0.08 versus $0.46 in the prior year.
- 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 Household Durables industry. The net income has significantly decreased by 98.8% when compared to the same quarter one year ago, falling from $391.70 million to $4.65 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 Household Durables industry and the overall market, GAFISA SA's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for GAFISA SA is rather low; currently it is at 22.51%. It has decreased significantly from the same period last year. Along with this, the net profit margin of 2.36% trails that of the industry average.
- Net operating cash flow has significantly decreased to $16.15 million or 84.66% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: GFA Ratings Report