NEW YORK ( TheStreet) -- Santarus (Nasdaq: SNTS) 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 impressive record of earnings per share growth. However, as a counter to these strengths, we find that the company's return on equity has been disappointing. Highlights from the ratings report include:
- SNTS's very impressive revenue growth greatly exceeded the industry average of 5.2%. Since the same quarter one year prior, revenues leaped by 101.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- SNTS's debt-to-equity ratio is very low at 0.17 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, SNTS has a quick ratio of 1.76, which demonstrates the ability of the company to cover short-term liquidity needs.
- The gross profit margin for SANTARUS INC is rather high; currently it is at 60.10%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, SNTS's net profit margin of 1.40% is significantly lower than the same period one year prior.
- Powered by its strong earnings growth of 200.00% and other important driving factors, this stock has surged by 98.15% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
- 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. In comparison to the other companies in the Pharmaceuticals industry and the overall market, SANTARUS INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
-- Written by a member of TheStreet Ratings Staff