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 (
) 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 increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.
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Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 4.7%. Since the same quarter one year prior, revenues rose by 32.0%. 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.
- Despite currently having a low debt-to-equity ratio of 0.34, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.38 is sturdy.
- 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. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
- The gross profit margin for ASM INTERNATIONAL NV is currently lower than what is desirable, coming in at 34.40%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.30% significantly trails the industry average.
- Net operating cash flow has significantly decreased to -$26.27 million or 135.44% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
ASM International N.V., together with its subsidiaries, engages in the research, development, manufacture, marketing, and servicing of equipment and materials that are primarily used to produce semiconductor devices. The company operates in two segments, Front-end and Back-end. The company has a P/E ratio of 10.2, below the average electronics industry P/E ratio of 12.4 and below the S&P 500 P/E ratio of 17.7. ASM International NV ADR has a market cap of $1.77 billion and is part of the technology sector and electronics industry. Shares are up 11.1% year to date as of the close of trading on Friday.
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-- Written by a member of TheStreet Ratings Staff
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