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) -- Bona Film Group (Nasdaq: BONA) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.
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- Despite its growing revenue, the company underperformed as compared with the industry average of 1.3%. Since the same quarter one year prior, revenues slightly increased by 1.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- BONA's debt-to-equity ratio is very low at 0.29 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Despite the fact that BONA's debt-to-equity ratio is low, the quick ratio, which is currently 0.63, displays a potential problem in covering short-term cash needs.
- BONA FILM GROUP LTD -ADR 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. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, BONA FILM GROUP LTD -ADR swung to a loss, reporting -$0.02 versus $0.24 in the prior year. This year, the market expects an improvement in earnings ($0.20 versus -$0.02).
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Media industry and the overall market on the basis of return on equity, BONA FILM GROUP LTD -ADR underperformed against that of the industry average and is significantly less than that of the S&P 500.
- The gross profit margin for BONA FILM GROUP LTD -ADR is rather low; currently it is at 19.00%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -10.07% is significantly below that of the industry average.
-- Written by a member of TheStreet Ratings Staff