NEW YORK ( TheStreet) -- seven Days Group Holdings (NYSE: SVN) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income and poor profit margins. Highlights from the ratings report include:
- SVN's debt-to-equity ratio is very low at 0.02 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Despite the fact that SVN's debt-to-equity ratio is low, the quick ratio, which is currently 0.65, displays a potential problem in covering short-term cash needs.
- seven DAYS GROUP HLDGS LTD -ADR 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. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, seven DAYS GROUP HLDGS LTD -ADR turned its bottom line around by earning $0.37 versus -$0.38 in the prior year. This year, the market expects an improvement in earnings ($3.29 versus $0.37).
- Compared to its closing price of one year ago, SVN's share price has jumped by 68.92%, exceeding the performance of the broader market during that same time frame. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
- The gross profit margin for seven DAYS GROUP HLDGS LTD -ADR is currently lower than what is desirable, coming in at 27.20%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.00% significantly trails the industry average.
- 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 Hotels, Restaurants & Leisure industry. The net income has decreased by 20.8% when compared to the same quarter one year ago, dropping from $0.84 million to $0.66 million.