Rating Change #3
Benchmark Electronics (BHE) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the ratings report include:
- BHE's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, BHE has a quick ratio of 2.04, which demonstrates the ability of the company to cover short-term liquidity needs.
- Net operating cash flow has significantly increased by 444.60% to $54.62 million when compared to the same quarter last year. In addition, BENCHMARK ELECTRONICS INC has also vastly surpassed the industry average cash flow growth rate of -44.61%.
- BENCHMARK ELECTRONICS INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, BENCHMARK ELECTRONICS INC reported lower earnings of $0.87 versus $1.28 in the prior year. This year, the market expects an improvement in earnings ($1.10 versus $0.87).
- BHE, with its decline in revenue, underperformed when compared the industry average of 6.4%. Since the same quarter one year prior, revenues fell by 10.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The share price of BENCHMARK ELECTRONICS INC has not done very well: it is down 11.22% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
Benchmark Electronics, Inc. provides electronics manufacturing services in the Americas, Asia, and Europe. The company has a P/E ratio of 17, below the average electronics industry P/E ratio of 17.6 and below the S&P 500 P/E ratio of 17.7. Benchmark has a market cap of $887.5 million and is part of the technology sector and electronics industry. Shares are up 13.4% year to date as of the close of trading on Thursday.You can view the full Benchmark Ratings Report or get investment ideas from our investment research center.
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