NEW YORK ( TheStreet) -- Trius Therapeutics (Nasdaq: TSRX) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share. 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 Biotechnology industry. The net income has significantly decreased by 43.0% when compared to the same quarter one year ago, falling from -$8.75 million to -$12.51 million.
- Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, TSRX has underperformed the S&P 500 Index, declining 7.36% 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.
- TRIUS THERAPEUTICS INC's earnings per share declined by 18.9% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, TRIUS THERAPEUTICS INC continued to lose money by earning -$0.78 versus -$1.01 in the prior year. For the next year, the market is expecting a contraction of 90.4% in earnings (-$1.49 versus -$0.78).
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Biotechnology industry and the overall market, TRIUS THERAPEUTICS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- TSRX 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 3.48, which clearly demonstrates the ability to cover short-term cash needs.
-- Written by a member of TheStreet Ratings Staff