NEW YORK ( TheStreet) -- China Shen Zhou Mining & Resources (AMEX: SHZ) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity and generally weak debt management. Highlights from the ratings report include:
- Net operating cash flow has significantly increased by 197.41% to $0.75 million when compared to the same quarter last year. Despite an increase in cash flow of 197.41%, CHINA SHEN ZHOU MINING & RES is still growing at a significantly lower rate than the industry average of 272.66%.
- Despite currently having a low debt-to-equity ratio of 0.49, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.11 is very low and demonstrates very weak liquidity.
- 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 Metals & Mining industry and the overall market, CHINA SHEN ZHOU MINING & RES'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 Metals & Mining industry. The net income has significantly decreased by 127.0% when compared to the same quarter one year ago, falling from $9.21 million to -$2.49 million.
- CHINA SHEN ZHOU MINING & RES 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 suffered a declining pattern earnings per share over the past two years. During the past fiscal year, CHINA SHEN ZHOU MINING & RES swung to a loss, reporting -$0.11 versus $0.23 in the prior year.