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) -- Spectrum Pharmaceuticals (Nasdaq: SPPI) 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 notable return on equity. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.
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- The revenue growth came in higher than the industry average of 6.8%. Since the same quarter one year prior, revenues rose by 32.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- SPPI's debt-to-equity ratio is very low at 0.26 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, SPPI has a quick ratio of 1.83, which demonstrates the ability of the company to cover short-term liquidity needs.
- The gross profit margin for SPECTRUM PHARMACEUTICALS INC is currently very high, coming in at 74.90%. Regardless of SPPI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 12.29% trails the industry average.
- SPECTRUM PHARMACEUTICALS INC reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, SPECTRUM PHARMACEUTICALS INC increased its bottom line by earning $1.46 versus $0.82 in the prior year. For the next year, the market is expecting a contraction of 100.0% in earnings ($0.00 versus $1.46).
- SPPI's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 41.61%, which is also worse than the performance of the S&P 500 Index. 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