NEW YORK ( TheStreet) -- Amerigon (Nasdaq: ARGN) 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, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, disappointing return on equity and poor profit margins. Highlights from the ratings report include:
- ARGN's very impressive revenue growth greatly exceeded the industry average of 9.1%. Since the same quarter one year prior, revenues leaped by 167.7%. 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.
- Net operating cash flow has significantly increased by 260.55% to $4.44 million when compared to the same quarter last year. In addition, AMERIGON INC has also vastly surpassed the industry average cash flow growth rate of -17.35%.
- AMERIGON INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, AMERIGON INC increased its bottom line by earning $0.44 versus $0.03 in the prior year. This year, the market expects an improvement in earnings ($0.49 versus $0.44).
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Auto Components industry and the overall market, AMERIGON INC's return on equity significantly trails that of both the industry average and the S&P 500.
- 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 Auto Components industry. The net income has significantly decreased by 41.9% when compared to the same quarter one year ago, falling from $2.31 million to $1.34 million.