ChinaEdu Corporation Stock Upgraded (CEDU)
Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model .
NEW YORK ( TheStreet) -- ChinaEdu Corporation (CEDU"> CEDU) has been upgraded by TheStreet Ratings from hold to buy. 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, expanding profit margins, good cash flow from operations and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
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Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 16.4%. Since the same quarter one year prior, revenues slightly increased by 9.9%. 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.
- CEDU has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 2.61, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for CHINAEDU CORP -ADR is rather high; currently it is at 67.00%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 2.63% is above that of the industry average.
- Net operating cash flow has significantly increased by 173.30% to $7.36 million when compared to the same quarter last year. In addition, CHINAEDU CORP -ADR has also vastly surpassed the industry average cash flow growth rate of -118.02%.
- CHINAEDU CORP -ADR's earnings per share declined by 50.0% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, CHINAEDU CORP -ADR reported lower earnings of $0.16 versus $0.34 in the prior year. This year, the market expects an improvement in earnings ($0.39 versus $0.16).
ChinaEdu Corporation, together with its subsidiaries, provides educational services to the online degree programs of universities in the People's Republic of China. The company has a P/E ratio of 127.6, above the S&P 500 P/E ratio of 17.7. ChinaEdu has a market cap of $114.4 million and is part of the services sector and diversified services industry. Shares are up 9.8% year to date as of the close of trading on Tuesday.