NEW YORK ( TheStreet) -- CHINA NUOKANG BIO-PHARMACEUTICAL (Nasdaq: NKBP) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • NKBP's debt-to-equity ratio is very low at 0.03 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 8.64, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for CHINA NUOKANG BIO-PHARMA-ADR is currently very high, coming in at 86.50%. Regardless of NKBP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NKBP's net profit margin of 1.20% is significantly lower than the same period one year prior.
  • 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 Pharmaceuticals industry. The net income has significantly decreased by 93.3% when compared to the same quarter one year ago, falling from $1.67 million to $0.11 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. Compared to other companies in the Pharmaceuticals industry and the overall market, CHINA NUOKANG BIO-PHARMA-ADR's return on equity significantly trails that of both the industry average and the S&P 500.

China Nuokang Bio-Pharmaceutical Inc., a biopharmaceutical company, engages in the research, development, manufacture, marketing, and sale of hospital-based medical products in the People's Republic of China. CHINA NUOKANG BIO-PHARMACEUTICAL has a market cap of $98.8 million and is part of the health care sector and drugs industry. Shares are up 81.2% year to date as of the close of trading on Monday.

You can view the full CHINA NUOKANG BIO-PHARMACEUTICAL Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.