NEW YORK (
) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, poor profit margins, weak operating cash flow, disappointing return on equity and generally disappointing historical performance in the stock itself.
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 when compared to that of the S&P 500 and the Construction Materials industry. The net income has significantly decreased by 218.0% when compared to the same quarter one year ago, falling from $3.56 million to -$4.21 million.
- The gross profit margin for CHINA ADVANCED CONSTR MATLS is rather low; currently it is at 16.80%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -22.20% is significantly below that of the industry average.
- Net operating cash flow has significantly decreased to -$6.37 million or 3049.07% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- 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 Construction Materials industry and the overall market on the basis of return on equity, CHINA ADVANCED CONSTR MATLS has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 30.19%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 226.31% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
China Advanced Construction Materials Group, Inc., through its subsidiaries, produces and supplies ready mix concrete materials and related technical services for large scale, high-speed rail, and other complex infrastructure projects primarily in the People's Republic of China. The company has a P/E ratio of 4.6, below the average materials & construction industry P/E ratio of 4.8 and below the S&P 500 P/E ratio of 17.7. China Advanced Construction Materials Group has a market cap of $28.2 million and is part of the
industry. Shares are down 29.5% year to date as of the close of trading on Thursday.
You can view the full
or get investment ideas from our
-- Written by a member of TheStreet Ratings Staff
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.