Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet, Inc., or any of its contributors. TheStreet Ratings quantitative algorithm evaluates over 4,300 stocks on a daily basis by 32 different data factors and assigns a unique buy, sell, or hold recommendation on each stock. Click here to learn more.
NEW YORK (TheStreet) -- China Bak Battery Inc (CBAK) has been upgraded by TheStreet Ratings from Sell to Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
TheStreet Ratings team rates CHINA BAK BATTERY INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate CHINA BAK BATTERY INC (CBAK) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and generally higher debt management risk."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- CHINA BAK BATTERY INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. During the past fiscal year, CHINA BAK BATTERY INC continued to lose money by earning -$2.12 versus -$9.18 in the prior year.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Electronic Equipment, Instruments & Components industry. The net income increased by 429.2% when compared to the same quarter one year prior, rising from -$5.28 million to $17.39 million.
- Compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, CHINA BAK BATTERY INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Despite currently having a low debt-to-equity ratio of 0.46, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.34 is very low and demonstrates very weak liquidity.
- CBAK's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 31.00%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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.
- You can view the full analysis from the report here: CBAK Ratings Report