NEW YORK ( TheStreet) -- Gentium SpA (Nasdaq: GENT) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, attractive valuation levels, good cash flow from operations, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- GENT's debt-to-equity ratio is very low at 0.12 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, GENT has a quick ratio of 1.90, which demonstrates the ability of the company to cover short-term liquidity needs.
- Net operating cash flow has significantly increased by 281.60% to $0.39 million when compared to the same quarter last year. In addition, GENTIUM SPA -ADR has also vastly surpassed the industry average cash flow growth rate of -6.24%.
- The gross profit margin for GENTIUM SPA -ADR is rather high; currently it is at 68.40%. Regardless of GENT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, GENT's net profit margin of -0.40% significantly underperformed when compared to the industry average.
- GENTIUM SPA -ADR 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. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, GENTIUM SPA -ADR reported lower earnings of $0.23 versus $0.36 in the prior year. This year, the market expects an improvement in earnings ($0.72 versus $0.23).
-- Written by a member of TheStreet RatingsStaff