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"We rate ASTRAZENECA PLC (AZN) 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 good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 8.8%. Since the same quarter one year prior, revenues slightly increased by 5.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The current debt-to-equity ratio, 0.49, is low and is below the industry average, implying that there has been successful management of debt levels.
- The gross profit margin for ASTRAZENECA PLC is currently very high, coming in at 92.46%. It has increased significantly from the same period last year. Despite the strong results of the gross profit margin, AZN's net profit margin of 3.77% significantly trails the industry average.
- 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 Pharmaceuticals industry. The net income has significantly decreased by 79.6% when compared to the same quarter one year ago, falling from $1,246.00 million to $254.00 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. In comparison to the other companies in the Pharmaceuticals industry and the overall market, ASTRAZENECA PLC'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: AZN Ratings Report