NEW YORK (
-- China Nutrifruit Group
) has been downgraded by TheStreet Ratings from hold to sell. Among the areas we feel are negative, one of the most important has been a generally disappointing historical performance in the stock itself.
Highlights from the ratings report include:
- CHINA NUTRIFRUIT GROUP LTD has improved earnings per share by 36.4% 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. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, CHINA NUTRIFRUIT GROUP LTD increased its bottom line by earning $0.50 versus $0.23 in the prior year. This year, the market expects an improvement in earnings ($0.57 versus $0.50).
- Net operating cash flow has significantly increased by 189.04% to $16.95 million when compared to the same quarter last year. In addition, CHINA NUTRIFRUIT GROUP LTD has also vastly surpassed the industry average cash flow growth rate of -103.85%.
- 49.00% is the gross profit margin for CHINA NUTRIFRUIT GROUP LTD which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, CNGL's net profit margin of 28.20% significantly trails the industry average.
- The company, on the basis of net income growth from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Food Products industry average. The net income increased by 33.8% when compared to the same quarter one year prior, rising from $4.66 million to $6.24 million.
- CNGL'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 49.26%, 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. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
China Nutrifruit Group Limited, through its subsidiary, Longheda, produces specialty fruit based products in the People's Republic of China. The company has a P/E ratio of 3.2, equal to the average food & beverage industry P/E ratio and below the S&P 500 P/E ratio of 17.7. China Nutrifruit Group has a market cap of $67 million and is part of the
industry. Shares are down 34.8% year to date as of the close of trading on Wednesday.
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