Why Gulf Resources (GURE) Hit a One-Year High Today

NEW YORK (TheStreet) -- Gulf Resources  (GURE) hit a one-year high of $3.20 as of 1:10 p.m. on Tuesday after the bromine and crude salt supplier reported its fourth-quarter and full-year earnings.

For the fourth quarter ended Dec. 31, 2013, the company reported a 195% year-over-year increase in net income to $5.6 million, or 15 cents per basic share and 14 cents per diluted share, from $1.9 million, or 5 cents per basic and diluted share. Revenue increased 36.5% year over year to $30.1 million, while gross profit increased 117% year over year to $9.1 million.

Gross margin widened year over year to 30.4% from 19.1%. Income from operations rose 186% year over year to $7.6 million from $2.6 million, while operating margin increased year over year to 25.1% from 12%.

For the full year, net income rose 40% year over year to $21 million, or 55 cents per basic share and 54 cents per diluted share, from $15 million, or 43 cents per basic and diluted share. Revenue increased 16% year over year to $118.4 million. Gross profit increased 21% to $34.2 million, while gross margin widened slightly to 29% from 28%. Cash totaled $107.8 million as of Dec. 31, 2013.

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TheStreet Ratings team rates GULF RESOURCES INC as a "hold" with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate GULF RESOURCES INC (GURE) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we find that the growth in the company's earnings per share has not been good."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 13.5%. Since the same quarter one year prior, revenues rose by 34.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • GURE's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 11.70, which clearly demonstrates the ability to cover short-term cash needs.
  • GULF RESOURCES INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, GULF RESOURCES INC reported lower earnings of $0.43 versus $0.88 in the prior year.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Chemicals industry and the overall market, GULF RESOURCES INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • You can view the full analysis from the report here: GURE Ratings Report

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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.

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