NEW YORK (
) 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, attractive valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and disappointing return on equity.
Highlights from the ratings report include:
- AMAT's debt-to-equity ratio is very low at 0.22 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.48, which illustrates the ability to avoid short-term cash problems.
- 46.40% is the gross profit margin for APPLIED MATERIALS INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 11.40% trails the industry average.
- Net operating cash flow has decreased to $603.00 million or 14.34% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, APPLIED MATERIALS INC has marginally lower results.
- 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 Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 40.9% when compared to the same quarter one year ago, falling from $489.00 million to $289.00 million.
Applied Materials, Inc. provides manufacturing equipment, services, and software to the semiconductor, flat panel display, solar photovoltaic (PV), and related industries worldwide. The company has a P/E ratio of 9.2, below the average electronics industry P/E ratio of 10.5 and below the S&P 500 P/E ratio of 17.7. Applied has a market cap of $13.76 billion and is part of the
industry. Shares are down 1.6% year to date as of the close of trading on Wednesday.
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-- Written by a member of TheStreet Ratings Staff