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 a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.
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Highlights from the ratings report include:
- SURG has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 4.25, which clearly demonstrates the ability to cover short-term cash needs.
- 38.30% is the gross profit margin for SYNERGETICS USA INC which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, SURG's net profit margin of -9.86% significantly underperformed when compared to the industry average.
- Net operating cash flow has significantly decreased to -$0.57 million or 214.74% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- 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. In comparison to the other companies in the Health Care Equipment & Supplies industry and the overall market, SYNERGETICS USA INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
Synergetics USA, Inc., a medical device company, provides precision surgical devices for the ophthalmology and neurosurgery markets in the United States and internationally. The company has a P/E ratio of 28.3, above the S&P 500 P/E ratio of 17.7. Synergetics USA has a market cap of $86 million and is part of the health care sector and health services industry. Shares are down 32.3% year to date as of the close of trading on Tuesday.
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-- Written by a member of TheStreet Ratings Staff
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