NEW YORK (TheStreet) -- ChinaCache International Holdings (Nasdaq:CCIH) has been downgraded by TheStreet Ratings from hold to sell. Among the areas we feel are negative, one of the most important has been a generally disappointing historical performance in the stock itself. Highlights from the ratings report include:
- CCIH'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 70.56%, 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.
- 38.60% is the gross profit margin for CHINACACHE INTL HLDGS -ADR which we consider to be strong. Regardless of CCIH's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CCIH's net profit margin of 10.90% is significantly lower than the same period one year prior.
- Compared to other companies in the Internet Software & Services industry and the overall market, CHINACACHE INTL HLDGS -ADR's return on equity significantly trails that of both the industry average and the S&P 500.
- CCIH's debt-to-equity ratio is very low at 0.01 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 3.06, which clearly demonstrates the ability to cover short-term cash needs.
- CHINACACHE INTL HLDGS -ADR reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, CHINACACHE INTL HLDGS -ADR continued to lose money by earning -$0.08 versus -$0.45 in the prior year. This year, the market expects an improvement in earnings ($0.21 versus -$0.08).
-- Written by a member of TheStreet Ratings Staff
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