NEW YORK ( TheStreet) -- WidePoint Corporation (AMEX: WYY) 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 notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and feeble growth in the company's earnings per share.

Highlights from the ratings report include:
  • The gross profit margin for WIDEPOINT CORP is rather low; currently it is at 19.20%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -3.00% is significantly below that of the industry average.
  • 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 IT Services industry. The net income has significantly decreased by 232.6% when compared to the same quarter one year ago, falling from $0.24 million to -$0.32 million.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. In comparison to other companies in the IT Services industry and the overall market on the basis of return on equity, WIDEPOINT CORP has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.
  • WYY's debt-to-equity ratio is very low at 0.05 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, WYY has a quick ratio of 1.58, which demonstrates the ability of the company to cover short-term liquidity needs.

WidePoint Corporation provides technology-based products and services to the government sector and commercial markets in the United States. The company has a P/E ratio of 9.8, above the average diversified services industry P/E ratio of 8.8 and below the S&P 500 P/E ratio of 17.7. WidePoint has a market cap of $55.4 million and is part of the services sector and diversified services industry. Shares are down 30.6% year to date as of the close of trading on Thursday.

You can view the full WidePoint Ratings Report or get investment ideas from our investment research center.

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