Editor's Note: 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. NEW YORK ( TheStreet) -- Auxilium Pharmaceuticals (Nasdaq: AUXL) has been downgraded by TheStreet Ratings from hold to sell. Among the areas we feel are negative, one of the most important has been unimpressive growth in net income over time.
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- 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 158.7% when compared to the same quarter one year ago, falling from -$4.06 million to -$10.50 million.
- 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 Pharmaceuticals industry and the overall market, AUXILIUM PHARMA INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for AUXILIUM PHARMA INC is currently very high, coming in at 77.80%. Regardless of AUXL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, AUXL's net profit margin of -14.80% significantly underperformed when compared to the industry average.
- Looking at where the stock is today compared to one year ago, we find that it is higher, and it has outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
- AUXILIUM PHARMA INC 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. 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, AUXILIUM PHARMA INC continued to lose money by earning -$0.69 versus -$1.07 in the prior year. This year, the market expects an improvement in earnings ($0.01 versus -$0.69).
-- Written by a member of TheStreet Ratings Staff