NEW YORK (TheStreet) -- China Distance Education Hldg Ltd-Shs Spons (NYSE:DL) 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, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. 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 came in higher than the industry average of 11.3%. Since the same quarter one year prior, revenues rose by 35.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- DL has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, DL has a quick ratio of 2.05, which demonstrates the ability of the company to cover short-term liquidity needs.
- The gross profit margin for CHINA DISTANCE EDUCATION-ADR is rather high; currently it is at 53.30%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 3.70% trails the industry average.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Diversified Consumer Services industry and the overall market, CHINA DISTANCE EDUCATION-ADR's return on equity significantly trails that of both the industry average and the S&P 500.
- DL has underperformed the S&P 500 Index, declining 11.17% from its price level of one year ago. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
-- Written by a member of TheStreet RatingsStaff
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