NEW YORK (TheStreet) -- China Pharma(CPHI.)has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and attractive valuation levels. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.
Highlights from the ratings report include:
CPHI's revenue growth has slightly outpaced the industry average of 10.6%. Since the same quarter one year prior, revenues rose by 20.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
CPHI's debt-to-equity ratio is very low at 0.03 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 5.40, which clearly demonstrates the ability to cover short-term cash needs.
40.40% is the gross profit margin for CHINA PHARMA HOLDINGS INC which we consider to be strong. Regardless of CPHI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CPHI's net profit margin of 28.20% compares favorably to the industry average.
The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Pharmaceuticals industry and the overall market, CHINA PHARMA HOLDINGS INC's return on equity exceeds that of both the industry average and the S&P 500.
CPHI'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 37.90%, 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 industry. But due to other concerns, we feel the stock is still not a good buy right now.
China Pharma Holdings, Inc. develops, manufactures, and markets generic and branded pharmaceutical products primarily to hospitals and private retailers in the People's Republic of China. The company has a P/E ratio of four, above the average drugs industry P/E ratio of 3.7 and below the S&P 500 P/E ratio of 17.7. China has a market cap of $89.7 million and is part of the health care sector and drugs industry. Shares are down 35.6% year to date as of the close of trading on Monday.