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Ambow Education Holding Ltd. Stock Upgraded (AMBO)

NEW YORK (TheStreet) -- Ambow Education (NYSE:AMBO) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, growth in earnings per share and largely solid financial position with reasonable debt levels by most measures. 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:

  • The revenue growth greatly exceeded the industry average of 4.6%. Since the same quarter one year prior, revenues rose by 49.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • AMBOW EDUCATION HLDGS -ADR has improved earnings per share by 14.3% in the most recent quarter compared to the same quarter a year ago. This year, the market expects an improvement in earnings ($3.87 versus $0.43).
  • AMBO's debt-to-equity ratio is very low at 0.07 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.72 is somewhat weak and could be cause for future problems.
  • The company, on the basis of net income growth from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Diversified Consumer Services industry average. The net income increased by 15.9% when compared to the same quarter one year prior, going from $5.19 million to $6.01 million.
  • AMBO'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 41.92%, 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. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.

Ambow Education Holding Ltd. provides educational and career enhancement services in the People's Republic of China. The company's Better Schools division offers K-12 degree programs and tutoring services that enable students to enhance their academic results and educational opportunities. The company has a P/E ratio of 31, above the average diversified services industry P/E ratio of 11.1 and above the S&P 500 P/E ratio of 17.7. Ambow has a market cap of $488.3 million and is part of the services sector and diversified services industry. Shares are down 50.4% year to date as of the close of trading on Monday.

You can view the full Ambow Ratings Report or get investment ideas from our investment research center.

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