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) -- Endo Health Solutions (Nasdaq: ENDP) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity.
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- Compared to its closing price of one year ago, ENDP's share price has jumped by 125.53%, exceeding the performance of the broader market during that same time frame. Although ENDP had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
- Net operating cash flow has increased to $155.44 million or 28.68% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -8.08%.
- The gross profit margin for ENDO HEALTH SOLUTIONS INC is rather high; currently it is at 68.31%. Regardless of ENDP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ENDP's net profit margin of 5.62% is significantly lower than the industry average.
- The debt-to-equity ratio is very high at 2.39 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, ENDP maintains a poor quick ratio of 0.77, which illustrates the inability to avoid short-term cash problems.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Pharmaceuticals industry and the overall market, ENDO HEALTH SOLUTIONS INC's return on equity significantly trails that of both the industry average and the S&P 500.