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Lihua International Inc. Stock Downgraded (LIWA)

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.

NEW YORK (TheStreet) -- Lihua International (Nasdaq:LIWA) has been downgraded by TheStreet Ratings from buy 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 also find weaknesses including poor profit margins and a generally disappointing performance in the stock itself.

  • EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 6.5%. Since the same quarter one year prior, revenues rose by 29.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • LIWA 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. Along with this, the company maintains a quick ratio of 10.65, which clearly demonstrates the ability to cover short-term cash needs.
  • LIWA has underperformed the S&P 500 Index, declining 9.11% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • The gross profit margin for LIHUA INTERNATIONAL INC is currently extremely low, coming in at 10.10%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 6.09% trails that of the industry average.
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Lihua International, Inc., through its subsidiaries, produces copper replacement products for copper wire and copper replacement product market in the People's Republic of China. The company has a P/E ratio of 2.8, below the S&P 500 P/E ratio of 17.7. Lihua International has a market cap of $145.8 million and is part of the basic materials sector and metals & mining industry. Shares are up 11.4% year to date as of the close of trading on Friday.

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

-- Written by a member of TheStreet Ratings Staff

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