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) -- China Yuchai International (NYSE: CYD) 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 attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and poor profit margins.
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- The revenue growth came in higher than the industry average of 21.7%. Since the same quarter one year prior, revenues slightly increased by 5.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The current debt-to-equity ratio, 0.40, is low and is below the industry average, implying that there has been successful management of debt levels.
- CHINA YUCHAI INTERNATIONAL has improved earnings per share by 5.6% in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past two years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, CHINA YUCHAI INTERNATIONAL reported lower earnings of $2.44 versus $3.49 in the prior year.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Machinery industry and the overall market, CHINA YUCHAI INTERNATIONAL's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- The gross profit margin for CHINA YUCHAI INTERNATIONAL is rather low; currently it is at 20.20%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 4.51% trails that of the industry average.
-- Written by a member of TheStreet Ratings Staff