TSC Ratings' Updates: China Unicom

TSC Ratings provides exclusive stock, ETF and mutual fund ratings and commentary based on award-winning, proprietary tools. Its "safety first" approach to investing aims to reduce risk while seeking solid outperformance on a total return basis.

The following ratings changes were generated on Tuesday, April 28.

We've upgraded Albemarle(ALB) from hold to buy, driven by its solid financial position based on a variety of debt and liquidity measures that we have evaluated. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Revenue fell 27.2% since the same quarter a year ago, and EPS are also down. Albemarle's debt-to-equity ratio of 0.9 is somewhat low overall but high compared with the industry average. Net income decreased 59.9% compared with the year-ago quarter, from $63.3 million to $25.4 million. Return on equity also decreased, implying a minor weakness in the organization. Albemarle's gross profit margin of 23.9% has decreased from the year-ago quarter, and the 5.2% net profit margin trails the industry average.

We've downgraded China Unicom(CHU) from hold to sell, driven by its feeble growth in its earnings per share, disappointing return on equity and generally disappointing historical performance in the stock itself.

EPS declined 75% in the most recent quarter compared with the year-ago quarter, and we anticipate that the company's declining EPS should continue in the coming year. ROE also decreased compared with the year-ago quarter. China Unicom's debt-to-equity ratio of 0.2 is below the industry average. The 0.2 quick ratio is weak and implies a lack of ability to pay short-term obligations. The 46.5% gross profit margin is strong, though it has decreased from the year-ago quarter. The net profit margin of 28% outperformed the industry average.