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 Xiniya Fashion (NYSE: XNY) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity, weak operating cash flow and poor profit margins.
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- CHINA XINIYA FASHION LTD-ADR's earnings per share declined by 25.0% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern earnings per share over the past two years. During the past fiscal year, CHINA XINIYA FASHION LTD-ADR reported lower earnings of $0.48 versus $0.68 in the prior year.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Textiles, Apparel & Luxury Goods industry. The net income has decreased by 22.1% when compared to the same quarter one year ago, dropping from $6.86 million to $5.35 million.
- 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. In comparison to the other companies in the Textiles, Apparel & Luxury Goods industry and the overall market, CHINA XINIYA FASHION LTD-ADR's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- Net operating cash flow has decreased to $13.11 million or 21.29% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The gross profit margin for CHINA XINIYA FASHION LTD-ADR is currently lower than what is desirable, coming in at 31.50%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 15.02% is above that of the industry average.
-- Written by a member of TheStreet Ratings Staff