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) -- E-House China Holdings (NYSE: EJ) has been upgraded by TheStreet Ratings from sell 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 impressive record of earnings per share growth. 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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- EJ's very impressive revenue growth greatly exceeded the industry average of 6.6%. Since the same quarter one year prior, revenues leaped by 97.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
- EJ 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. To add to this, EJ has a quick ratio of 2.11, which demonstrates the ability of the company to cover short-term liquidity needs.
- The gross profit margin for E-HOUSE CHINA HOLDINGS -ADR is rather high; currently it is at 55.40%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -4.65% is in-line with the industry average.
- 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 Real Estate Management & Development industry and the overall market on the basis of return on equity, E-HOUSE CHINA HOLDINGS -ADR underperformed against that of the industry average and is significantly less than that of the S&P 500.
- EJ has underperformed the S&P 500 Index, declining 13.24% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
-- Written by a member of TheStreet Ratings Staff