NEW YORK ( TheStreet) -- SK Telecom (NYSE: SKM) 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, largely solid financial position with reasonable debt levels by most measures and attractive valuation levels. However, as a counter to these strengths, we find that net income has been generally deteriorating over time. 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 Wireless Telecommunication Services industry. The net income has decreased by 9.2% when compared to the same quarter one year ago, dropping from $395.16 million to $358.95 million.
- SK TELECOM CO LTD's earnings per share declined by 10.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SK TELECOM CO LTD increased its bottom line by earning $1.62 versus $1.44 in the prior year. This year, the market expects an improvement in earnings ($1.95 versus $1.62).
- When compared to other companies in the Wireless Telecommunication Services industry and the overall market, SK TELECOM CO LTD's return on equity is below that of both the industry average and the S&P 500.
- The current debt-to-equity ratio, 0.41, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.21, which illustrates the ability to avoid short-term cash problems.
- The revenue growth significantly trails the industry average of 84.0%. Since the same quarter one year prior, revenues slightly increased by 5.0%. 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.