NEW YORK ( TheStreet) -- Nevsun Resources (AMEX: NSU) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we find that the stock itself is trading at a premium valuation.

Highlights from the ratings report include:
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Metals & Mining industry and the overall market on the basis of return on equity, NEVSUN RESOURCES LTD underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • NSU's debt-to-equity ratio is very low at 0.08 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.54, which clearly demonstrates the ability to cover short-term cash needs.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Metals & Mining industry. The net income increased by 265.7% when compared to the same quarter one year prior, rising from -$7.12 million to $11.80 million.

Nevsun Resources Ltd., a natural resource company, together with its subsidiaries, engages in the acquisition, exploration, development, and production of mineral properties. It principally mines and explores for gold, as well as base metals, such as copper and zinc. The company has a P/E ratio of 200, equal to the average metals & mining industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Nevsun has a market cap of $1.2 billion and is part of the basic materials sector and metals & mining industry. Shares are down 20.3% year to date as of the close of trading on Monday.

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