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) -- Synutra International (Nasdaq: SYUT) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income and expanding profit margins. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet.
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- The revenue growth greatly exceeded the industry average of 3.2%. Since the same quarter one year prior, revenues rose by 34.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Personal Products industry. The net income increased by 113.7% when compared to the same quarter one year prior, rising from -$44.19 million to $6.07 million.
- SYNUTRA INTERNATIONAL INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SYNUTRA INTERNATIONAL INC swung to a loss, reporting -$1.11 versus $0.29 in the prior year. This year, the market expects an improvement in earnings ($0.34 versus -$1.11).
- 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 Personal Products industry and the overall market, SYNUTRA INTERNATIONAL INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The debt-to-equity ratio is very high at 7.79 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, SYUT has a quick ratio of 0.65, this demonstrates the lack of ability of the company to cover short-term liquidity needs.