NEW YORK (

TheStreet

)

-- GeoEye

(Nasdaq:

GEOY

) 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, increase in net income and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and generally poor debt management.

Highlights from the ratings report include:

  • 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. In comparison to the other companies in the Aerospace & Defense industry and the overall market, GEOEYE INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • The debt-to-equity ratio of 1.11 is relatively high when compared with the industry average, suggesting a need for better debt level management. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 2.72, which shows the ability to cover short-term cash needs.
  • GEOEYE INC reported significant earnings per share improvement 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, GEOEYE INC reported lower earnings of $0.97 versus $1.53 in the prior year. This year, the market expects an improvement in earnings ($1.95 versus $0.97).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Aerospace & Defense industry. The net income increased by 1482.3% when compared to the same quarter one year prior, rising from $0.77 million to $12.25 million.
  • GEOY's revenue growth has slightly outpaced the industry average of 3.5%. Since the same quarter one year prior, revenues slightly increased by 7.8%. Growth in the company's revenue appears to have helped boost the earnings per share.

GeoEye, Inc., together with its subsidiaries, provides earth imagery and imagery information products, as well as image processing services to the United States and foreign government defense and intelligence organizations, domestic federal and foreign civil agencies, and commercial customers. The company has a P/E ratio of 23.7, equal to the average computer software & services industry P/E ratio and above the S&P 500 P/E ratio of 17.7. GeoEye has a market cap of $747.4 million and is part of the

TheStreet Recommends

technology

sector and

computer software & services

industry. Shares are down 21.4% year to date as of the close of trading on Wednesday.

You can view the full

GeoEye Ratings Report

or get investment ideas from our

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