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) -- Nevsun Resources (AMEX: NSU) has been downgraded by TheStreet Ratings from buy 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 feeble growth in the company's earnings per share, deteriorating net income and poor profit margins.
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- NSU has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 8.10, which clearly demonstrates the ability to cover short-term cash needs.
- NSU, with its very weak revenue results, has greatly underperformed against the industry average of 7.9%. Since the same quarter one year prior, revenues plummeted by 96.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The share price of NEVSUN RESOURCES LTD has not done very well: it is down 10.65% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- NEVSUN RESOURCES LTD has experienced 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. During the past fiscal year, NEVSUN RESOURCES LTD reported lower earnings of $0.05 versus $0.71 in the prior year.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Metals & Mining industry. The net income has significantly decreased by 120.8% when compared to the same quarter one year ago, falling from $20.25 million to -$4.21 million.