NEW YORK ( TheStreet) -- IDT Corporation (NYSE: IDT) 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 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 weak operating cash flow.

Highlights from the ratings report include:
  • Net operating cash flow has decreased to $20.97 million or 34.86% 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 IDT CORP is rather low; currently it is at 19.50%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.80% trails that of the industry average.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Diversified Telecommunication Services industry and the overall market on the basis of return on equity, IDT CORP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • IDT's debt-to-equity ratio is very low at 0.17 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.28, which illustrates the ability to avoid short-term cash problems.
  • IDT's revenue growth has slightly outpaced the industry average of 11.3%. Since the same quarter one year prior, revenues rose by 11.7%. 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.

IDT Corporation operates as a telecommunications and energy company. It operates in three segments: Telecom Platform Services, Consumer Phone Services, and Genie Energy. The company has a P/E ratio of 15.6, above the average telecommunications industry P/E ratio of 15.5 and below the S&P 500 P/E ratio of 17.7. IDT has a market cap of $508 million and is part of the technology sector and telecommunications industry. Shares are down 13.6% year to date as of the close of trading on Friday.

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

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