NEW YORK ( TheStreet) -- Endeavour Silver Corporation (AMEX: EXK) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, 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 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 Metals & Mining industry. The net income has significantly decreased by 71.8% when compared to the same quarter one year ago, falling from $1.72 million to $0.49 million.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Metals & Mining industry and the overall market, ENDEAVOUR SILVER CORP's return on equity is below that of both the industry average and the S&P 500.
- Compared to its closing price of one year ago, EXK's share price has jumped by 181.12%, exceeding the performance of the broader market during that same time frame. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
- EXK has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 7.87, which clearly demonstrates the ability to cover short-term cash needs.
- EXK's very impressive revenue growth greatly exceeded the industry average of 48.5%. Since the same quarter one year prior, revenues leaped by 93.7%. 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.