NEW YORK (
-- LGL Group
) 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, notable return on equity and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and a generally disappointing performance in the stock itself.
Highlights from the ratings report include:
- The gross profit margin for LGL GROUP INC is currently lower than what is desirable, coming in at 34.90%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 2.70% trails that of the industry average.
- 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 Electronic Equipment, Instruments & Components industry. The net income has significantly decreased by 77.4% when compared to the same quarter one year ago, falling from $1.07 million to $0.24 million.
- LGL, with its decline in revenue, underperformed when compared the industry average of 7.3%. Since the same quarter one year prior, revenues fell by 15.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, LGL GROUP INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- LGL's debt-to-equity ratio is very low at 0.02 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.46, which clearly demonstrates the ability to cover short-term cash needs.
The LGL Group, Inc., through its subsidiary, M-tron Industries, Inc., designs, manufactures, and markets custom-designed engineered electronic components that are used primarily to control the frequency or timing of signals in electronic circuits. The company has a P/E ratio of 7.1, equal to the average electronics industry P/E ratio and below the S&P 500 P/E ratio of 15.9. LGL Group has a market cap of $39.6 million and is part of the
industry. Shares are down 26% year to date as of the close of trading on Thursday.
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