NEW YORK ( TheStreet) -- EchoStar (Nasdaq: SATS) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:
  • SATS'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. Along with this, the company maintains a quick ratio of 3.59, which clearly demonstrates the ability to cover short-term cash needs.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • 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 Communications Equipment industry. The net income has significantly decreased by 76.1% when compared to the same quarter one year ago, falling from $71.75 million to $17.16 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. When compared to other companies in the Communications Equipment industry and the overall market, ECHOSTAR CORP's return on equity is below that of both the industry average and the S&P 500.

EchoStar Corporation engages in the design, development, and distribution of digital set-top boxes and related products for direct-to-home satellite service providers. The company has a P/E ratio of 16, equal to the average telecommunications industry P/E ratio and below the S&P 500 P/E ratio of 17.7. EchoStar has a market cap of $1.1 billion and is part of the technology sector and telecommunications industry. Shares are up 1.2% year to date as of the close of trading on Tuesday.

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

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