NEW YORK ( TheStreet) -- 3SBio (Nasdaq: SSRX) 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 reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and disappointing return on equity. Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 7.1%. Since the same quarter one year prior, revenues rose by 36.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- SSRX 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 13.45, which clearly demonstrates the ability to cover short-term cash needs.
- 3SBIO INC -ADR has improved earnings per share by 23.5% in the most recent quarter compared to the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. However, the consensus estimates suggest that there will be an upward trend in the coming year. During the past fiscal year, 3SBIO INC -ADR's EPS of $0.56 remained unchanged from the prior years' EPS of $0.56. This year, the market expects an improvement in earnings ($0.73 versus $0.56).
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Biotechnology industry and the overall market on the basis of return on equity, 3SBIO INC -ADR has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- SSRX has underperformed the S&P 500 Index, declining 12.85% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.