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 reasonable valuation levels, expanding profit margins and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.
Highlights from the ratings report include:
- 44.20% is the gross profit margin for COMTECH TELECOMMUN which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, CMTL's net profit margin of 5.90% significantly trails the industry average.
- Compared to where it was trading a year ago, CMTL's share price has not changed very much due to (a) the relatively weak year-over-year performance of the overall market, (b) the company's stagnant earnings, and (c) other mixed 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 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 Communications Equipment industry and the overall market, COMTECH TELECOMMUN's return on equity is below that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to $11.97 million or 52.00% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
Comtech Telecommunications Corp. designs, develops, produces, and markets products, systems, and services for communications solutions in the United States and internationally. The company has a P/E ratio of 17.6, below the average telecommunications industry P/E ratio of 17.7 and below the S&P 500 P/E ratio of 17.7. Comtech Telecommunications has a market cap of $551 million and is part of the
industry. Shares are up 1.3% year to date as of the close of trading on Tuesday.
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-- Written by a member of TheStreet Ratings Staff