NEW YORK ( TheStreet) -- Multi-Fineline Electronix Incorporated (Nasdaq: MFLX) 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 also find weaknesses including a generally disappointing performance in the stock itself, disappointing return on equity and weak operating cash flow. Highlights from the ratings report include:
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, MULTI-FINELINE ELECTRON INC's return on equity is below that of both the industry average and the S&P 500.
- MFLX has underperformed the S&P 500 Index, declining 18.81% from its price level of one year ago. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
- MULTI-FINELINE ELECTRON INC reported significant earnings per share improvement 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, MULTI-FINELINE ELECTRON INC reported lower earnings of $1.16 versus $1.81 in the prior year. This year, the market expects an improvement in earnings ($2.04 versus $1.16).
- MFLX 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. To add to this, MFLX has a quick ratio of 1.59, which demonstrates the ability of the company to cover short-term liquidity needs.
- The revenue growth came in higher than the industry average of 8.1%. Since the same quarter one year prior, revenues rose by 34.4%. Growth in the company's revenue appears to have helped boost the earnings per share.