NEW YORK (TheStreet) -- Echelon Corporation (Nasdaq:ELON) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall. Highlights from the ratings report include:
- ELON's very impressive revenue growth greatly exceeded the industry average of 15.8%. Since the same quarter one year prior, revenues leaped by 62.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- ELON's debt-to-equity ratio is very low at 0.26 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.06, which clearly demonstrates the ability to cover short-term cash needs.
- 49.70% is the gross profit margin for ECHELON CORP which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -0.30% trails the industry average.
- 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 Electronic Equipment, Instruments & Components industry and the overall market, ECHELON CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has decreased to -$3.10 million or 28.51% when compared to the same quarter last year. Despite a decrease in cash flow ECHELON CORP is still fairing well by exceeding its industry average cash flow growth rate of -51.12%.
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