NEW YORK ( TheStreet) -- Comfort Systems USA (NYSE: FIX) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and deteriorating net income. Highlights from the ratings report include:
- 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 Construction & Engineering industry. The net income has significantly decreased by 368.3% when compared to the same quarter one year ago, falling from $1.93 million to -$5.17 million.
- COMFORT SYSTEMS USA INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, COMFORT SYSTEMS USA INC reported lower earnings of $0.36 versus $0.90 in the prior year. For the next year, the market is expecting a contraction of 61.1% in earnings ($0.14 versus $0.36).
- 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. Compared to other companies in the Construction & Engineering industry and the overall market on the basis of return on equity, COMFORT SYSTEMS USA INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
- FIX's debt-to-equity ratio is very low at 0.10 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.35, which illustrates the ability to avoid short-term cash problems.
- FIX's revenue growth has slightly outpaced the industry average of 9.6%. Since the same quarter one year prior, revenues rose by 19.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.