NEW YORK ( TheStreet) -- Universal Electronics (Nasdaq: UEIC) 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 solid stock price performance. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, poor profit margins and weak operating cash flow.

Highlights from the ratings report include:
  • Net operating cash flow has significantly decreased to $0.29 million or 94.20% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • The gross profit margin for UNIVERSAL ELECTRONICS INC is currently lower than what is desirable, coming in at 30.20%. It has decreased from the same quarter the previous year.
  • UEIC's debt-to-equity ratio is very low at 0.13 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.99 is somewhat weak and could be cause for future problems.
  • The revenue growth greatly exceeded the industry average of 14.1%. Since the same quarter one year prior, revenues rose by 48.1%. 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.

Universal Electronics Inc. and its subsidiaries develop pre-programmed wireless control products and audio-video accessories that enhance home entertainment systems. The company has a P/E ratio of 24.1, equal to the average consumer durables industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Universal has a market cap of $383.9 million and is part of the consumer goods sector and consumer durables industry. Shares are down 12.8% year to date as of the close of trading on Thursday.

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