TSC Ratings' Updates: Goldman

The following ratings changes were generated on Monday, Oct. 20.

We've downgraded Gentex(GNTX Quote), which designs, develops, manufactures and markets proprietary products employing electro-optic technology, from buy to hold. Strengths include its revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity. Weaknesses include a generally disappointing performance in the stock itself, premium valuation and weak operating cash flow.

Gentex's revenue growth of 4.3% since the same quarter one year ago slightly outpaced the industry average of 2.4%, but EPS declined. The company has no debt to speak of, resulting in a debt-to-equity ratio of zero. It also maintains a quick ratio of 6.42, clearly demonstrating its ability to cover short-term cash needs. Its gross profit margin of 39.8% is strong but is a decrease from the same period last year. Its net profit margin of 15.8% significantly outperformed the industry. Net operating cash flow has decreased to $16.67 million, or 25.40% when compared with the same quarter last year. In addition, its growth rate is much lower than the industry average.

We've downgraded global investment banking and securities firm Goldman Sachs(GS Quote) from buy to hold. Strengths include its reasonable valuation levels, good cash flow from operations and expanding profit margins. Weaknesses include generally poor debt management, deteriorating net income and a generally disappointing performance in the stock itself.

Net operating cash flow has significantly increased by 113.75% to $2,613.00 million when compared with the same quarter last year, but it is still lower than the industry average growth rate of 159.85%. Goldman's gross profit margin of 64.9% is rather high, but it is a decrease from the same period last year. Net profit margin of 6.2% compares favorably with the industry average.