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) -- Furiex Pharmaceuticals (Nasdaq: FURX) has been downgraded by TheStreet Ratings from hold to sell. The area that we feel has been the company's primary weakness has been its disappointing return on equity.
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- 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. Compared to other companies in the Life Sciences Tools & Services industry and the overall market, FURIEX PHARMACEUTICALS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for FURIEX PHARMACEUTICALS INC is currently lower than what is desirable, coming in at 25.70%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, FURX's net profit margin of 22.79% significantly outperformed against the industry.
- FURX's debt-to-equity ratio of 0.80 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that FURX's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.93 is high and demonstrates strong liquidity.
- Net operating cash flow has significantly increased by 179.50% to $9.54 million when compared to the same quarter last year. In addition, FURIEX PHARMACEUTICALS INC has also vastly surpassed the industry average cash flow growth rate of -13.34%.
- This stock has increased by 104.81% 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 FURX do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
-- Written by a member of TheStreet Ratings Staff