NEW YORK (
) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, good cash flow from operations, expanding profit margins, largely solid financial position with reasonable debt levels by most measures and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the ratings report include:
- CHEMSPEC INTL LTD -ADR has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CHEMSPEC INTL LTD -ADR increased its bottom line by earning $0.94 versus $0.57 in the prior year. This year, the market expects an improvement in earnings ($1.05 versus $0.94).
- CPC's debt-to-equity ratio is very low at 0.04 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.73 is somewhat weak and could be cause for future problems.
- 47.40% is the gross profit margin for CHEMSPEC INTL LTD -ADR which we consider to be strong. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of 10.80% trails the industry average.
- Net operating cash flow has significantly increased by 27891.89% to $10.36 million when compared to the same quarter last year. In addition, CHEMSPEC INTL LTD -ADR has also vastly surpassed the industry average cash flow growth rate of -67.41%.
Chemspec International Limited, through its subsidiaries, engages in the design, manufacture, and sale of chemical compounds in the People's Republic of China. The company has a P/E ratio of 8.2, below the average chemicals industry P/E ratio of 8.6 and below the S&P 500 P/E ratio of 17.7. Chemspec International has a market cap of $281.6 million and is part of the
industry. Shares are up 3.6% year to date as of the close of trading on Monday.
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