NEW YORK ( TheStreet Ratings) -- Every trading day TheStreet Ratings' stock model reviews the investment ratings on around 4,700 U.S. traded stocks for potential upgrades or downgrades based on the latest available financial results and trading activity.
TheStreet Ratings released rating changes on 56 U.S. common stocks for week ending January 13, 2012. 43 stocks were upgraded and 13 stocks were downgraded by our stock model.
Rating Change #10
Westell Technologies Inc (WSTL - Get Report) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and a generally disappointing performance in the stock itself.Highlights from the ratings report include:
- WSTL 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 7.40, which clearly demonstrates the ability to cover short-term cash needs.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Communications Equipment industry and the overall market, WESTELL TECH INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- 37.70% is the gross profit margin for WESTELL TECH INC 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 11.20% trails the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Communications Equipment industry. The net income has significantly decreased by 26.6% when compared to the same quarter one year ago, falling from $4.76 million to $3.50 million.
- Net operating cash flow has decreased to $5.98 million or 28.38% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.