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- . The area that we feel has been the company's primary weakness has been its meager revenue growth.
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Highlights from the ratings report include:
- ARNA, with its very weak revenue results, has greatly underperformed against the industry average of 5.4%. Since the same quarter one year prior, revenues plummeted by 57.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- 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. When compared to other companies in the Biotechnology industry and the overall market, ARENA PHARMACEUTICALS INC's return on equity has significantly outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- Net operating cash flow has significantly increased by 97.17% to -$0.52 million when compared to the same quarter last year. In addition, ARENA PHARMACEUTICALS INC has also vastly surpassed the industry average cash flow growth rate of 19.75%.
- The debt-to-equity ratio is somewhat low, currently at 0.64, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with this, the company maintains a quick ratio of 8.95, which clearly demonstrates the ability to cover short-term cash needs.
- This stock has increased by 586.56% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in ARNA do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
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 $2.02 billion and is part of the health care sector and drugs industry. Shares are up 394.7% year to date as of the close of trading on Wednesday.
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--Written by a member of TheStreet Ratings Staff.
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