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, reasonable valuation levels 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:
- ORBK's debt-to-equity ratio is very low at 0.18 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 3.57, which clearly demonstrates the ability to cover short-term cash needs.
- 46.70% is the gross profit margin for ORBOTECH LTD which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 1.60% trails the industry average.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. When compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, ORBOTECH LTD's return on equity is below that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to -$19.76 million or 326.68% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
Orbotech Ltd. engages in designing, developing, manufacturing, marketing, and servicing yield-enhancing and production solutions for specialized applications in the supply chain of the electronics industry. The company has a P/E ratio of 10.7, above the average electronics industry P/E ratio of 10.5 and below the S&P 500 P/E ratio of 17.7. Orbotech has a market cap of $410.2 million and is part of the
industry. Shares are down 7.1% 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.