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 (
) has been reiterated by TheStreet Ratings as a sell with a ratings score of D- . Among the areas we feel are negative, one of the most important has been poor profit margins.
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Highlights from the ratings report include:
- The gross profit margin for ARENA PHARMACEUTICALS INC is rather low; currently it is at 19.80%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, ARNA's net profit margin of -100.60% significantly underperformed when compared to the industry average.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Biotechnology industry and the overall market, ARENA PHARMACEUTICALS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The company, on the basis of net income growth from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Biotechnology industry average. The net income increased by 3.5% when compared to the same quarter one year prior, going from -$22.91 million to -$22.10 million.
- ARNA's debt-to-equity ratio of 0.70 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 8.77 is very high and demonstrates very strong liquidity.
- Net operating cash flow has increased to -$12.24 million or 37.52% when compared to the same quarter last year. Despite an increase in cash flow, ARENA PHARMACEUTICALS INC's average is still marginally south of the industry average growth rate of 39.46%.
Arena Pharmaceuticals, Inc., a clinical-stage biopharmaceutical company, engages in discovering, developing, and commercializing oral drugs that target G protein-coupled receptors in the therapeutic areas of cardiovascular, central nervous system, inflammatory, and metabolic diseases. Arena has a market cap of $1.45 billion and is part of the
industry. Shares are up 362% year to date as of the close of trading on Friday.
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--Written by a member of TheStreet Ratings Staff.