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 deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself.
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Highlights from the ratings report include:
- NEWP, with its decline in revenue, slightly underperformed the industry average of 7.6%. Since the same quarter one year prior, revenues fell by 12.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- NEWP's debt-to-equity ratio of 0.63 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.50 is sturdy.
- 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 426.7% when compared to the same quarter one year ago, falling from $34.53 million to -$112.81 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. Compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, NEWPORT CORP's return on equity significantly trails that of both the industry average and the S&P 500.
Newport Corporation and its subsidiaries provide technology products and systems to scientific research, microelectronics, aerospace and defense/security, life and health sciences, and industrial markets in the United States, Europe, and the Pacific Rim. The company has a P/E ratio of 10.2, below the S&P 500 P/E ratio of 17.7. Newport has a market cap of $584.2 million and is part of the services sector and wholesale industry. Shares are up 13.4% 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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