NEW YORK ( TheStreet) -- China Sky One Medical (Nasdaq: CSKI) 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, weak operating cash flow 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 Personal Products industry. The net income has significantly decreased by 93.8% when compared to the same quarter one year ago, falling from $8.60 million to $0.53 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. In comparison to the other companies in the Personal Products industry and the overall market, CHINA SKY ONE MEDICAL INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • Net operating cash flow has significantly decreased to -$0.79 million or 112.58% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 80.21%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 94.11% 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.
  • CHINA SKY ONE MEDICAL INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past two years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, CHINA SKY ONE MEDICAL INC increased its bottom line by earning $2.13 versus $1.85 in the prior year.

China Sky One Medical, Inc., through its subsidiaries, engages in the development, manufacture, marketing, and sale of over-the-counter, branded nutritional supplements, and over-the-counter plant and herb-based pharmaceutical and medicinal products primarily in the People's Republic of China. The company has a P/E ratio of 1.5, equal to the average drugs industry P/E ratio and below the S&P 500 P/E ratio of 17.7. China Sky One Medical has a market cap of $23.6 million and is part of the health care sector and drugs industry. Shares are down 80% year to date as of the close of trading on Tuesday.

You can view the full China Sky One Medical Ratings Report or get investment ideas from our investment research center.
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