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DTS Inc. Stock Downgraded (DTSI)

NEW YORK ( TheStreet) -- DTS (Nasdaq: DTSI) has been downgraded by TheStreet Ratings from buy 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 impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and premium valuation.

Highlights from the ratings report include:

  • DTSI's revenue growth has slightly outpaced the industry average of 15.9%. Since the same quarter one year prior, revenues rose by 17.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • DTSI 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 9.92, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for DTS INC is currently lower than what is desirable, coming in at 27.20%. Regardless of DTSI's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, DTSI's net profit margin of 12.60% significantly outperformed against the industry.
  • DTSI has underperformed the S&P 500 Index, declining 10.82% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.

DTS, Inc. provides entertainment technologies that are incorporated into various entertainment products worldwide. The company has a P/E ratio of 30.4, equal to the average computer software & services industry P/E ratio and above the S&P 500 P/E ratio of 17.7. DTS has a market cap of $516.7 million and is part of the technology sector and computer software & services industry. Shares are down 39.3% year to date as of the close of trading on Thursday.

You can view the full DTS Ratings Report or get investment ideas from our investment research center.

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