NEW YORK ( TheStreet) -- China XD Plastics (Nasdaq: CXDC) has been upgraded by TheStreet Ratings from sell 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 notable return on equity. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year. Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 9.2%. Since the same quarter one year prior, revenues rose by 42.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
- CXDC's debt-to-equity ratio is very low at 0.23 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, CXDC has a quick ratio of 1.89, which demonstrates the ability of the company to cover short-term liquidity needs.
- The gross profit margin for CHINA XD PLASTICS CO LTD is currently lower than what is desirable, coming in at 26.40%. Regardless of CXDC's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, CXDC's net profit margin of 16.30% significantly outperformed against the industry.
- CXDC has underperformed the S&P 500 Index, declining 10.74% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.