NEW YORK ( TheStreet) -- Longwei Petroleum Investment Holding Limite (AMEX: LPH) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself and poor profit margins. Highlights from the ratings report include:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 496.9% when compared to the same quarter one year prior, rising from -$3.58 million to $14.19 million.
- LONGWEI PETROLEUM INVT HLDG 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, LONGWEI PETROLEUM INVT HLDG increased its bottom line by earning $0.36 versus $0.21 in the prior year.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. In comparison to other companies in the Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, LONGWEI PETROLEUM INVT HLDG has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.
- The gross profit margin for LONGWEI PETROLEUM INVT HLDG is rather low; currently it is at 20.00%. Regardless of LPH's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, LPH's net profit margin of 11.80% compares favorably to the industry average.
- LPH has underperformed the S&P 500 Index, declining 22.73% from its price level of one year ago. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.