NEW YORK ( TheStreet) -- JDS Uniphase Corporation (Nasdaq: JDSU) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the company's return on equity has been disappointing. Highlights from the ratings report include:
- 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. When compared to other companies in the Communications Equipment industry and the overall market, JDS UNIPHASE CORP's return on equity is below that of both the industry average and the S&P 500.
- Powered by its strong earnings growth of 420.00% and other important driving factors, this stock has surged by 76.32% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
- The gross profit margin for JDS UNIPHASE CORP is rather high; currently it is at 50.80%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, JDSU's net profit margin of 8.50% significantly trails the industry average.
- Although JDSU's debt-to-equity ratio of 0.30 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 2.58, which clearly demonstrates the ability to cover short-term cash needs.
- The revenue growth greatly exceeded the industry average of 9.2%. Since the same quarter one year prior, revenues rose by 36.6%. Growth in the company's revenue appears to have helped boost the earnings per share.