Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link. NEW YORK (TheStreet) -- Nevsun Resources (AMEX:NSU) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, attractive valuation levels and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
- NSU'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 10.43, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for NEVSUN RESOURCES LTD is rather high; currently it is at 64.15%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, NSU's net profit margin of 4.53% is significantly lower than the industry average.
- NSU, with its very weak revenue results, has greatly underperformed against the industry average of 2.0%. Since the same quarter one year prior, revenues plummeted by 84.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- 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 Metals & Mining industry and the overall market on the basis of return on equity, NEVSUN RESOURCES LTD has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
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