NEW YORK (
) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its 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 deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 8.1%. Since the same quarter one year prior, revenues slightly increased by 2.4%. 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.
- SORL's debt-to-equity ratio is very low at 0.22 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, SORL has a quick ratio of 2.02, which demonstrates the ability of the company to cover short-term liquidity needs.
- 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 Auto Components industry. The net income has significantly decreased by 42.5% when compared to the same quarter one year ago, falling from $5.81 million to $3.34 million.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Auto Components industry and the overall market, SORL AUTO PARTS INC's return on equity is below that of both the industry average and the S&P 500.
SORL Auto Parts, Inc., through its 90% ownership in Ruili Group Ruian Auto Parts Co., Ltd., engages in the development, manufacture, and distribution of automotive brake systems and other safety related auto parts in the People's Republic of China. The company has a P/E ratio of 3.8, equal to the average automotive industry P/E ratio and below the S&P 500 P/E ratio of 17.7. SORL Auto Parts has a market cap of $63.5 million and is part of the
industry. Shares are up 37.4% year to date as of the close of trading on Thursday.
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-- Written by a member of TheStreet Ratings Staff