NEW YORK (TheStreet) -- China Gengsheng Minerals (CHGS.) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, generally weak debt management, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:

The debt-to-equity ratio of 1.32 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, CHGS maintains a poor quick ratio of 0.96, which illustrates the inability to avoid short-term cash problems.
Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Chemicals industry and the overall market, CHINA GENGSHENG MINERALS INC's return on equity significantly trails that of both the industry average and the S&P 500.
The gross profit margin for CHINA GENGSHENG MINERALS INC is currently lower than what is desirable, coming in at 28.90%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -1.20% is significantly below that of the industry average.
Net operating cash flow has significantly decreased to -$1.09 million or 268.89% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
CHINA GENGSHENG MINERALS INC has exprienced 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, CHINA GENGSHENG MINERALS INC reported lower earnings of $0.02 versus $0.24 in the prior year. For the next year, the market is expecting a contraction of 125.0% in earnings (-$0.01 versus $0.02).
China GengSheng Minerals, Inc., through its subsidiaries, develops, manufactures, and sells a range of mineral-based heat-resistant products, including monolithic refractories, industrial ceramics, fracture proppants, and fine precision abrasives. The company has a P/E ratio of 5.1, below the S&P 500 P/E ratio of 17.7. China Gengsheng has a market cap of $35.4 million and is part of the basic materials sector and metals & mining industry. Shares are down 74.4% year to date as of the close of trading on Tuesday.