NEW YORK ( TheStreet) -- China Sunergy (Nasdaq: CSUN) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, generally weak debt management and generally disappointing historical performance in the stock itself. 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 Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 222.3% when compared to the same quarter one year ago, falling from $13.83 million to -$16.92 million.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. In comparison to the other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, CHINA SUNERGY CO LTD's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- The gross profit margin for CHINA SUNERGY CO LTD is currently extremely low, coming in at 2.60%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -11.70% is significantly below that of the industry average.
- Currently the debt-to-equity ratio of 1.72 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Even though the debt-to-equity ratio is weak, CSUN's quick ratio is somewhat strong at 1.06, demonstrating the ability to handle short-term liquidity needs.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 72.01%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 227.27% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.