NEW YORK (TheStreet) -- Rofin-Sinar Technologies Incorporated (Nasdaq:RSTI) 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, reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and a generally disappointing performance in the stock itself. Highlights from the ratings report include:
- RSTI's debt-to-equity ratio is very low at 0.04 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, RSTI has a quick ratio of 1.95, which demonstrates the ability of the company to cover short-term liquidity needs.
- 40.00% is the gross profit margin for ROFIN SINAR TECHNOLOGIES INC which we consider to be strong. Regardless of RSTI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, RSTI's net profit margin of 6.20% compares favorably to the industry average.
- Net operating cash flow has significantly decreased to -$3.35 million or 124.05% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, ROFIN SINAR TECHNOLOGIES INC's return on equity is below that of both the industry average and the S&P 500.
-- Written by a member of TheStreet Ratings Staff
TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
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