Rating Change #1
China Zenix Auto International Ltd
(ZX - Get Report)
has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and poor profit margins.
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Highlights from the ratings report include:
- The current debt-to-equity ratio, 0.31, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.06, which illustrates the ability to avoid short-term cash problems.
- ZX, with its decline in revenue, underperformed when compared the industry average of 0.7%. Since the same quarter one year prior, revenues fell by 21.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Net operating cash flow has significantly decreased to $27.04 million or 57.03% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Auto Components industry. The net income has significantly decreased by 56.2% when compared to the same quarter one year ago, falling from $18.25 million to $7.99 million.
China Zenix Auto International Limited, an investment holding company, engages in the research, development, production, and sale of commercial vehicle wheels to aftermarket and original equipment manufacturers in the People's Republic of China and internationally. China Zenix Auto International Ltd ADR has a market cap of $171.3 million and is part of the consumer goods sector and automotive industry.
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-- Reported by Kevin Baker in Palm Beach Gardens, Fla.
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Editor's Note: 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.