Editor's Note: 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 NEW YORK (TheStreet) -- Berkshire Hathaway (NYSE:BRK.B) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, poor profit margins and weak operating cash flow.
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- Despite its growing revenue, the company underperformed as compared with the industry average of 0.7%. Since the same quarter one year prior, revenues slightly increased by 0.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- The gross profit margin for BERKSHIRE HATHAWAY is rather low; currently it is at 17.00%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, BRK.B's net profit margin of 8.10% is in-line with the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Insurance industry average. The net income has decreased by 9.0% when compared to the same quarter one year ago, dropping from $3,417.00 million to $3,108.00 million.
-- Written by a member of TheStreet Ratings Staff
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