NEW YORK (TheStreet) -- E-House China Holdings (EJ) , a real estate services company in the People's Republic of China, was falling 10.26% to $12.51 on Monday afternoon after Chinese media reports that banks would tighten credit on property developers.
Chinese property shares fell the most they have in eight months on Monday as speculation raged that the reduced lending would slow growth, according to Bloomberg.
TheStreet Ratings team rates E-HOUSE CHINA HOLDINGS -ADR as a "hold" with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate E-HOUSE CHINA HOLDINGS -ADR (EJ) 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 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 find that the company's return on equity has been disappointing."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth greatly exceeded the industry average of 39.2%. Since the same quarter one year prior, revenues rose by 43.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- EJ has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, EJ has a quick ratio of 2.09, which demonstrates the ability of the company to cover short-term liquidity needs.
- The gross profit margin for E-HOUSE CHINA HOLDINGS -ADR is rather high; currently it is at 64.70%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 9.82% trails the industry average.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. When compared to other companies in the Real Estate Management & Development industry and the overall market, E-HOUSE CHINA HOLDINGS -ADR's return on equity has significantly outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- Powered by its strong earnings growth of 177.77% and other important driving factors, this stock has surged by 186.36% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
- You can view the full analysis from the report here: EJ Ratings Report