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) -- THT Heat Transfer Technology (Nasdaq: THTI) has been downgraded by TheStreet Ratings from hold to sell. Among the areas we feel are negative, one of the most important has been poor profit margins.
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- The gross profit margin for THT HEAT TRANSFER TECH INC is currently lower than what is desirable, coming in at 33.56%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 5.80% trails that of the industry average.
- 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 Machinery industry and the overall market, THT HEAT TRANSFER TECH INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- THT HEAT TRANSFER TECH INC reported flat earnings per share in the most recent quarter. Stable Earnings per share over the past year indicate the company has sound management over its earnings and share float. During the past fiscal year, THT HEAT TRANSFER TECH INC's EPS of $0.15 remained unchanged from the prior years' EPS of $0.15.
- Compared to where it was a year ago, the stock is now trading at a higher level, and has traded in line with the S&P 500. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
- THTI's debt-to-equity ratio is very low at 0.23 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.13, which illustrates the ability to avoid short-term cash problems.