China XD Plastics (CXDC) Downgraded From Buy to Hold

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NEW YORK (TheStreet) -- China Xd Plastics  (CXDC) 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 CHINA XD PLASTICS CO LTD (CXDC) 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, notable return on equity and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow, poor profit margins and a generally disappointing performance in the stock itself."

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

  • CXDC's revenue growth has slightly outpaced the industry average of 1.2%. Since the same quarter one year prior, revenues slightly increased by 7.7%. 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 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. Compared to other companies in the Auto Components industry and the overall market, CHINA XD PLASTICS CO LTD's return on equity exceeds that of both the industry average and the S&P 500.
  • CXDC's debt-to-equity ratio of 0.77 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that CXDC's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.64 is high and demonstrates strong liquidity.
  • The gross profit margin for CHINA XD PLASTICS CO LTD is rather low; currently it is at 22.27%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 13.66% is above that of the industry average.
  • Net operating cash flow has significantly decreased to $2.78 million or 86.91% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • You can view the full analysis from the report here: CXDC Ratings Report

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