NEW YORK (
-- China Advanced Construction Materials Group
) 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 attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and poor profit margins.
Highlights from the ratings report include:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Construction Materials industry. The net income has significantly decreased by 59.3% when compared to the same quarter one year ago, falling from $7.95 million to $3.23 million.
- Net operating cash flow has decreased to -$0.64 million or 37.04% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- CADC's debt-to-equity ratio is very low at 0.20 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, CADC has a quick ratio of 1.58, which demonstrates the ability of the company to cover short-term liquidity needs.
- The revenue growth greatly exceeded the industry average of 11.3%. Since the same quarter one year prior, revenues rose by 31.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
China Advanced Construction Materials Group, Inc., through its subsidiaries, produces and supplies ready mix concrete materials for the commercial, residential, and infrastructure developments primarily in the People's Republic of China. The company has a P/E ratio of 4.6, above the average materials & construction industry P/E ratio of 3.7 and below the S&P 500 P/E ratio of 16.8. China Advanced Construction Materials Group has a market cap of $61.5 million and is part of the
industry. Shares are down 29.5% year to date as of the close of trading on Friday.
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