NEW YORK (
-- Yuhe International
) 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 and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.
Highlights from the ratings report include:
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Food Products industry and the overall market, YUHE INTERNATIONAL INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Food Products industry. The net income has significantly decreased by 1407.9% when compared to the same quarter one year ago, falling from $3.64 million to -$47.61 million.
- YUHE INTERNATIONAL INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, YUHE INTERNATIONAL INC swung to a loss, reporting -$1.67 versus $0.81 in the prior year. This year, the market expects an improvement in earnings ($1.71 versus -$1.67).
- YUII's debt-to-equity ratio is very low at 0.11 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.47, which illustrates the ability to avoid short-term cash problems.
- YUII's very impressive revenue growth greatly exceeded the industry average of 13.6%. Since the same quarter one year prior, revenues leaped by 64.0%. 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.
Yuhe International, Inc. engages in the supply of day-old chickens raised for meat production or broilers in the People's Republic of China. The company purchases baby parent breeding stocks from primary breeder farms, raises them for hatching eggs, and sells live day-old broilers. The company has a P/E ratio of 6.6, equal to the average food & beverage industry P/E ratio and below the S&P 500 P/E ratio of 16.4. Yuhe International has a market cap of $141.7 million and is part of the
industry. Shares are down 25.6% year to date as of the close of trading on Thursday.
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