NEW YORK (
-- Cogo 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 impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including poor profit margins and a generally disappointing performance in the stock itself.
Highlights from the ratings report include:
- The gross profit margin for COGO GROUP INC is rather low; currently it is at 15.40%. Regardless of COGO's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, COGO's net profit margin of 4.00% is significantly lower than the same period one year prior.
- COGO has underperformed the S&P 500 Index, declining 11.43% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- Although COGO's debt-to-equity ratio of 0.27 is very low, it is currently higher than that of the industry average. To add to this, COGO has a quick ratio of 2.33, which demonstrates the ability of the company to cover short-term liquidity needs.
- The revenue growth greatly exceeded the industry average of 8.8%. Since the same quarter one year prior, revenues rose by 28.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
Cogo Group, Inc., through its subsidiaries, provides customized module design solutions, focusing on the digital media, telecommunications equipment, and industrial business end-markets in China. The company has a P/E ratio of 13.5, below the average electronics industry P/E ratio of 14.2 and below the S&P 500 P/E ratio of 17.7. Cogo Group has a market cap of $232.4 million and is part of the
industry. Shares are down 29.9% year to date as of the close of trading on Tuesday.
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