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 robust revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.
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Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 8.7%. Since the same quarter one year prior, revenues rose by 18.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- HOLI's debt-to-equity ratio is very low at 0.12 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, HOLI has a quick ratio of 2.20, which demonstrates the ability of the company to cover short-term liquidity needs.
- 42.10% is the gross profit margin for HOLLYSYS AUTOMATION TECH LTD which we consider to be strong. Regardless of HOLI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, HOLI's net profit margin of 17.40% significantly outperformed against the industry.
- 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. Compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, HOLLYSYS AUTOMATION TECH LTD's return on equity exceeds that of both the industry average and the S&P 500.
Hollysys Automation Technologies Ltd. provides automation and control technologies and applications to customers in the industrial, railway, subway, and nuclear industries in China and south-east Asia. The company has a P/E ratio of 8.2, below the average industrial industry P/E ratio of 10 and below the S&P 500 P/E ratio of 17.7. Hollysys Automation has a market cap of $420 million and is part of the
industry. Shares are down 9.9% year to date as of the close of trading on Tuesday.
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-- Written by a member of TheStreet Ratings Staff
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.