NEW YORK ( TheStreet) -- China Biologic Products (Nasdaq: CBPO) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its 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 also find weaknesses including deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 6.8%. Since the same quarter one year prior, revenues rose by 14.7%. 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.
- CBPO's debt-to-equity ratio is very low at 0.09 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, CBPO has a quick ratio of 1.65, which demonstrates the ability of the company to cover short-term liquidity needs.
- The gross profit margin for CHINA BIOLOGIC PRODUCTS INC is currently very high, coming in at 71.20%. Regardless of CBPO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CBPO's net profit margin of -22.70% significantly underperformed when compared to 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 Biotechnology industry. The net income has significantly decreased by 168.2% when compared to the same quarter one year ago, falling from $13.73 million to -$9.36 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. When compared to other companies in the Biotechnology industry and the overall market, CHINA BIOLOGIC PRODUCTS INC's return on equity is below that of both the industry average and the S&P 500.