Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link. NEW YORK ( TheStreet) -- Bona Film Group (Nasdaq: BONA) has been upgraded by TheStreet Ratings from sell to hold. Among the primary strengths of the company is its solid financial position based on a variety of debt and liquidity measures that we have evaluated. At the same time, however, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.
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- BONA's debt-to-equity ratio is very low at 0.30 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.71 is somewhat weak and could be cause for future problems.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 2.4%. Since the same quarter one year prior, revenues slightly dropped by 0.8%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- 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 ($0.17 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 currently lower than what is desirable, coming in at 34.14%. It has decreased significantly from the same period last year. Along with this, the net profit margin of 1.26% trails that of the industry average.