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NEW YORK (TheStreet) -- Xinyuan Real Estate (XIN) has been downgraded by TheStreet Ratings from Buy to Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate XINYUAN REAL ESTATE CO -ADR (XIN) 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. Among the primary strengths of the company is its attractive valuation levels, considering its current price compared to earnings, book value and other measures. At the same time, however, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- XIN, with its decline in revenue, slightly underperformed the industry average of 11.9%. Since the same quarter one year prior, revenues fell by 15.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Even though the current debt-to-equity ratio is 1.42, it is still below the industry average, suggesting that this level of debt is acceptable within the Real Estate Management & Development industry. Despite the fact that XIN's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.69 is low and demonstrates weak liquidity.
- 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. When compared to other companies in the Real Estate Management & Development industry and the overall market, XINYUAN REAL ESTATE CO -ADR's return on equity is below that of both the industry average and the S&P 500.
- The gross profit margin for XINYUAN REAL ESTATE CO -ADR is currently lower than what is desirable, coming in at 25.93%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 4.09% trails that of the industry average.
- You can view the full analysis from the report here: XIN Ratings Report