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 downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.
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- 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 Media industry. The net income has significantly decreased by 75.8% when compared to the same quarter one year ago, falling from $2.27 million to $0.55 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. 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 currently lower than what is desirable, coming in at 34.10%. It has decreased significantly from the same period last year. Along with this, the net profit margin of 1.26% significantly trails the industry average.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 29.99%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 75.00% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- 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 ($0.18 versus -$0.02).
-- Written by a member of TheStreet Ratings Staff