Why China Ming Yang Wind Power (MY) Stock Is Down Today

NEW YORK (TheStreet) -- China Ming Yang Wind Power (MY) was falling -6.9% to $3.13 Monday after reporting its second quarter results.

For the second quarter the company reported earnings of RMB0.11 a share, up from a loss of RMB0.51 a share in the year-ago quarter. Revenue grew 74.1% from the year-ago quarter to RMB935.6 million for the quarter.

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TheStreet Ratings team rates CHINA MING YANG WIND PWR-ADR as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate CHINA MING YANG WIND PWR-ADR (MY) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity and poor profit margins."

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

  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Electrical Equipment industry and the overall market, CHINA MING YANG WIND PWR-ADR's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for CHINA MING YANG WIND PWR-ADR is rather low; currently it is at 15.69%. Regardless of MY's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, MY's net profit margin of 15.39% compares favorably to the industry average.
  • CHINA MING YANG WIND PWR-ADR 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, CHINA MING YANG WIND PWR-ADR reported poor results of -$0.68 versus -$0.37 in the prior year.
  • Despite currently having a low debt-to-equity ratio of 0.58, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.81 is weak.
  • This stock has increased by 94.47% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in MY do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
  • You can view the full analysis from the report here: MY 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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