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 largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.
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Highlights from the ratings report include:
- MAGS's debt-to-equity ratio is very low at 0.09 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, MAGS has a quick ratio of 2.36, which demonstrates the ability of the company to cover short-term liquidity needs.
- MAGS, with its decline in revenue, underperformed when compared the industry average of 1.0%. Since the same quarter one year prior, revenues fell by 13.5%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- 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 2439.1% when compared to the same quarter one year ago, falling from $0.05 million to -$1.08 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. When compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, MAGAL SECURITY SYSTEMS's return on equity is below that of both the industry average and the S&P 500.
Magal Security Systems Ltd., together with its subsidiaries, develops, manufactures, and sells safety, security, site management, and intelligence gathering and compilation solutions and products in Israel, North America, Europe, South and Latin America, Africa, and internationally. The company has a P/E ratio of 19.3, above the S&P 500 P/E ratio of 17.7. Magal Security Systems has a market cap of $59.3 million and is part of the services sector and diversified services industry. Shares are down 10.3% year to date as of the close of trading on Thursday.
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-- Written by a member of TheStreet Ratings Staff
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