NEW YORK (TheStreet) -- Synthesis Energy Systems (SYMX) spiked 23.12% to $2.13 at 9:51 a.m. on Wednesday after the company announced that its wholly-owned subsidiary, SES Asia Technologies, and Zhangjiagang Chemical Machinery had received a 20-year business license from the Chinese government for their joint venture, ZCM-SES Sino-U.S. Clean Energy Technologies.
"Along with our joint venture partner, ZCM, we are pleased to be proceeding smoothly with China government approvals," said SES President and CEO Robert Rigdon in a statement. "ZCM has already been working diligently on securing the first orders for ZCM-SES, and we have been working in parallel to ensure a seamless transition of our Shanghai team into the new joint venture. A ZCM-SES general manager has been selected, and will be named after an upcoming meeting of the JV's Board of Directors."
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TheStreet Ratings team rates SYNTHESIS ENERGY SYSTEMS INC as a "sell" with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate SYNTHESIS ENERGY SYSTEMS INC (SYMX) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. Among the areas we feel are negative, one of the most important has been poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The gross profit margin for SYNTHESIS ENERGY SYSTEMS INC is currently lower than what is desirable, coming in at 30.91%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, SYMX's net profit margin of -24.26% significantly underperformed when compared to the industry average.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Energy Equipment & Services industry and the overall market, SYNTHESIS ENERGY SYSTEMS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- SYMX's debt-to-equity ratio is very low at 0.06 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.88 is somewhat weak and could be cause for future problems.
- SYNTHESIS ENERGY SYSTEMS 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 year. During the past fiscal year, SYNTHESIS ENERGY SYSTEMS INC continued to lose money by earning -$0.34 versus -$0.40 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 Energy Equipment & Services industry. The net income increased by 67.4% when compared to the same quarter one year prior, rising from -$4.40 million to -$1.44 million.
- You can view the full analysis from the report here: SYMX Ratings Report
Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.