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) -- Impax Laboratories (Nasdaq: IPXL) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its 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 also find weaknesses including a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share.
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- IPXL's revenue growth has slightly outpaced the industry average of 8.5%. Since the same quarter one year prior, revenues rose by 15.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
- IPXL has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 3.17, which clearly demonstrates the ability to cover short-term cash needs.
- 47.30% is the gross profit margin for IMPAX LABORATORIES INC which we consider to be strong. Regardless of IPXL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, IPXL's net profit margin of 71.00% significantly outperformed against the industry.
- IMPAX LABORATORIES INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. 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, IMPAX LABORATORIES INC reported lower earnings of $0.81 versus $0.99 in the prior year. For the next year, the market is expecting a contraction of 53.1% in earnings ($0.38 versus $0.81).
- IPXL has underperformed the S&P 500 Index, declining 23.21% from its price level of one year ago. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
-- Written by a member of TheStreet Ratings Staff