Exela Technologies Inc (XELA)

[ErnieBilco]

From The Street on April 23rd:

RECOMMENDATION
We rate EXELA TECHNOLOGIES INC (XELA) 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 and generally disappointing historical performance
in the stock itself.
HIGHLIGHTS
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 Comp Infrastructure, Data, Web Hosting,
Related Se subsector. The net income has significantly decreased by 174.9% when compared to the same
quarter one year ago, falling from -$70.61 million to -$194.14 million.
The gross profit margin for EXELA TECHNOLOGIES INC is rather low; currently it is at 18.02%. It has decreased
from the same quarter the previous year. Along with this, the net profit margin of -72.72% is significantly
below that of the subsector average.
XELA's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the
net result is that it is down by 99.46%, which is also worse that the performance of the S&P 500 Index.
Investors have so far failed to pay much attention to the earnings improvements the company has managed
to achieve over the last 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 subsector. But due to other
concerns, we feel the stock is still not a good buy right now.
XELA, with its decline in revenue, slightly underperformed the subsector average of 3.2%. Since the same
quarter one year prior, revenues slightly dropped by 9.3%. The declining revenue has not hurt the company's
bottom line, with increasing earnings per share.
EXELA TECHNOLOGIES INC reported significant earnings per share improvement in the most recent quarter
compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per
share growth over the past two years. During the past fiscal year, EXELA TECHNOLOGIES INC continued to
lose money by earning -$9.39 versus -$30.40 in the prior year.

Ernie's note: Keep in mind that the loss per shares is compromised since they did that 20 to 1 RS in July so a sane person would take that -$9.39 and multiply by 20 to get a more realistic idea of how poorly this stock has performed.