Based on the aggregated intelligence of 135,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, consulting and managed services provider eLoyalty (NASDAQ:ELOY) has received the dreaded one-star ranking.

With that in mind, let's take a closer look at eLoyalty's business, and see what CAPS investors are saying about the stock right now.

eLoyalty facts

Headquarters (founded)

Lake Forest, Ill. (1994)

Market cap

$117.1 million


IT consulting and other services

TTM revenue

$99.1 million


President/CEO Kelly Conway (since May 1999)
CFO William Noon (since February 2009)

Year-to-date return


Return on capital (average, last three years)


Highly rated consulting stock alternatives

Accenture (NYSE:ACN)

CAPS members bearish on ELOY also bearish on


CAPS members bullish on ELOY also bullish on

Valero Energy (NYSE:VLO)
Cemex (NYSE:CX)

Sources: Capital IQ, a division of Standard & Poor's, and Motley Fool CAPS. TTM = trailing 12 months.

Over on CAPS, fully 27 of the 46 members who have rated eLoyalty -- some 59% -- believe the stock will underperform the S&P 500 going forward. These bears include All-Stars mrindependent and TSIF, both of whom are ranked in the top 4% of our community.

Late last month, mrindependent raised the red flags on eLoyalty's red results: "This company has lost over $180 million since inception and is set to lose another $12 million or so this year. ... I am shorting this while I can."

In a pitch from three weeks earlier, TSIF stays loyal to that sentiment:

Fundamentally, eLoyalty is a disaster, not just waiting to happen, but long over due for a plunge. With a P/B of 9, negative margins, negative cash flow, sustained losses ... it is surviving by issuing stock, burning off the cash, issuing stock, burning off the cash, etc. While this economy might be good for some consulting companies as companies strive to make the most of their limited resources, eLoyalty couldn't consult their way out of a paper bag, and their potential customers know it.

What do you think about eLoyalty, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 135,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Accenture is a Motley Fool Inside Value pick. Cemex is a selection of Stock Advisor and Global Gains, and the Fool owns shares of it. The Fool's disclosure policy always gets a perfect score.