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) -- Arena Pharmaceuticals (Nasdaq: ARNA) has been reiterated by TheStreet Ratings as a sell with a ratings score of D- . The area that we feel has been the company's primary weakness has been its meager revenue growth.
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- ARNA, with its very weak revenue results, has greatly underperformed against the industry average of 5.7%. Since the same quarter one year prior, revenues plummeted by 57.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- 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. When compared to other companies in the Biotechnology industry and the overall market, ARENA PHARMACEUTICALS INC's return on equity has significantly outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- This stock has increased by 474.28% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in ARNA do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
- ARENA PHARMACEUTICALS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, ARENA PHARMACEUTICALS INC continued to lose money by earning -$0.83 versus -$1.15 in the prior year. This year, the market expects an improvement in earnings (-$0.16 versus -$0.83).
- The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Biotechnology industry average. The net income increased by 31.7% when compared to the same quarter one year prior, rising from -$22.74 million to -$15.52 million.
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