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Coherent Inc Stock Downgraded (COHR)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

NEW YORK ( TheStreet) -- Coherent (Nasdaq: COHR) 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 and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, disappointing return on equity and relatively poor performance when compared with the S&P 500 during the past year.

  • EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.

Highlights from the ratings report include:

  • COHR's debt-to-equity ratio is very low at 0.00 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 2.84, which clearly demonstrates the ability to cover short-term cash needs.
  • COHERENT INC's earnings per share declined by 23.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, COHERENT INC increased its bottom line by earning $2.70 versus $2.62 in the prior year. This year, the market expects an improvement in earnings ($3.33 versus $2.70).
  • 37.36% is the gross profit margin for COHERENT INC which we consider to be strong. Regardless of COHR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, COHR's net profit margin of 6.61% compares favorably to the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Electronic Equipment, Instruments & Components industry. The net income has decreased by 22.1% when compared to the same quarter one year ago, dropping from $16.69 million to $13.00 million.
  • 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, COHERENT INC's return on equity is below that of both the industry average and the S&P 500.

Coherent, Inc. provides photonics-based solutions for a range of commercial and scientific research applications in the United States and internationally. The company operates through two segments: Specialty Lasers and Systems, and Commercial Lasers and Components. Coherent has a market cap of $1.46 billion and is part of the technology sector and electronics industry. Shares are down 20.3% year to date as of the close of trading on Tuesday.

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

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