Globecomm Systems Inc. Stock Downgraded (GCOM)

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) -- Globecomm Systems (Nasdaq:GCOM) 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, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and a generally disappointing performance in the stock itself.

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Highlights from the ratings report include:

• The revenue growth came in higher than the industry average of 2.7%. Since the same quarter one year prior, revenues rose by 14.4%. 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.
• GCOM's debt-to-equity ratio is very low at 0.09 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, GCOM has a quick ratio of 2.20, which demonstrates the ability of the company to cover short-term liquidity needs.
• The gross profit margin for GLOBECOMM SYSTEMS INC is rather low; currently it is at 24.70%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 3.30% significantly 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 71.3% when compared to the same quarter one year ago, falling from $9.33 million to $2.68 million.

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Globecomm Systems Inc. provides satellite-based managed network solutions to government, communications service providers, commercial enterprises, and media and content broadcasters in the United States, Europe, South America, Africa, the Middle East, and Asia. The company has a P/E ratio of 11.6, below the S&P 500 P/E ratio of 17.7. Globecomm Systems has a market cap of $260.9 million and is part of the technology sector and computer hardware industry. Shares are down 15.8% year to date as of the close of trading on Tuesday.

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

-- Written by a member of TheStreet Ratings Staff

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For more information on Globecomm Systems Inc. click any of the following:

• Globecomm Systems Inc. Stock Price

• Globecomm Systems Inc. Analyst Ratings

• Globecomm Systems Inc. Key Stats & Profile

• Globecomm Systems Inc. Earnings

• Globecomm Systems Inc. Ratio Comparison

• Globecomm Systems Inc. Growth Rates

• Globecomm Systems Inc. Balance Sheet

• Globecomm Systems Inc. Cash Flow

• Globecomm Systems Inc. Income Statement