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.
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- 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.
-- Written by a member of TheStreet Ratings Staff
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