NEW YORK ( TheStreet) -- Jinpan International (Nasdaq: JST) 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 attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and unimpressive growth in net income. Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 4.8%. Since the same quarter one year prior, revenues rose by 49.4%. 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.
- JST's debt-to-equity ratio is very low at 0.20 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, JST has a quick ratio of 1.66, which demonstrates the ability of the company to cover short-term liquidity needs.
- JINPAN INTERNATIONAL LTD's earnings per share declined by 5.7% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, JINPAN INTERNATIONAL LTD increased its bottom line by earning $1.45 versus $0.81 in the prior year. This year, the market expects an improvement in earnings ($1.70 versus $1.45).
- The change in net income from the same quarter one year ago has exceeded that of the Electrical Equipment industry average, but is less than that of the S&P 500. The net income has decreased by 7.9% when compared to the same quarter one year ago, dropping from $5.87 million to $5.41 million.
- Looking at the price performance of JST's shares over the past 12 months, there is not much good news to report: the stock is down 28.17%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than 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.
-- Written by a member of TheStreet Ratings Staff