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) -- China XD Plastics (Nasdaq: CXDC) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and growth in earnings per share. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.
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- CXDC's very impressive revenue growth greatly exceeded the industry average of 13.5%. Since the same quarter one year prior, revenues leaped by 79.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The current debt-to-equity ratio, 0.58, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.27, which illustrates the ability to avoid short-term cash problems.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Auto Components industry and the overall market, CHINA XD PLASTICS CO LTD's return on equity exceeds that of both the industry average and the S&P 500.
- The gross profit margin for CHINA XD PLASTICS CO LTD is rather low; currently it is at 24.22%. 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 14.00% is above that of the industry average.