NEW YORK ( TheStreet) -- China Telecom Corporation (NYSE: CHA) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and solid stock price performance. However, as a counter to these strengths, we find that the growth in the company's net income has been quite unimpressive.

Highlights from the ratings report include:
  • 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 Diversified Telecommunication Services industry. The net income has significantly decreased by 36.4% when compared to the same quarter one year ago, falling from $794.57 million to $505.51 million.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • The gross profit margin for CHINA TELECOM CORP LTD is rather high; currently it is at 53.00%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of 5.70% trails the industry average.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 13.3%. Since the same quarter one year prior, revenues rose by 11.5%. 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.

China Telecom Corporation Limited, together with its subsidiaries, provides wire line and mobile telecommunications services in the People's Republic of China. The company has a P/E ratio of 19.2, below the average telecommunications industry P/E ratio of 19.6 and above the S&P 500 P/E ratio of 17.7. China Telecom has a market cap of $45.8 billion and is part of the technology sector and telecommunications industry. Shares are up 8.2% year to date as of the close of trading on Tuesday.

You can view the full China Telecom Ratings Report or get investment ideas from our investment research center.

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