NEW YORK (TheStreet) -- Sucampo Pharmaceuticals Inc. A (Nasdaq:SCMP) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, poor profit margins and generally weak debt management.
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- 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 Pharmaceuticals industry and the overall market, SUCAMPO PHARMACEUTICALS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for SUCAMPO PHARMACEUTICALS INC is currently extremely low, coming in at 0.20%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, SCMP's net profit margin of -13.30% significantly underperformed when compared to the industry average.
- Currently the debt-to-equity ratio of 1.66 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Regardless of the company's weak debt-to-equity ratio, SCMP has managed to keep a strong quick ratio of 2.46, which demonstrates the ability to cover short-term cash needs.
- SUCAMPO PHARMACEUTICALS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past two years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, SUCAMPO PHARMACEUTICALS INC reported poor results of -$0.43 versus -$0.07 in the prior year.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Pharmaceuticals industry. The net income increased by 72.1% when compared to the same quarter one year prior, rising from -$6.91 million to -$1.93 million.
-- Written by a member of TheStreet Ratings Staff
TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
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