NEW YORK ( TheStreet) -- Lincoln Educational Services Corportion (Nasdaq: LINC) 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 deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself. Highlights from the ratings report include:
- LINC's debt-to-equity ratio is very low at 0.15 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
- The gross profit margin for LINCOLN EDUCATIONAL SERVICES is rather high; currently it is at 62.70%. Regardless of LINC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, LINC's net profit margin of 3.80% is significantly lower than the same period one year prior.
- 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. Compared to other companies in the Diversified Consumer Services industry and the overall market on the basis of return on equity, LINCOLN EDUCATIONAL SERVICES has underperformed in comparison with the industry average, but has exceeded that of 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 Diversified Consumer Services industry. The net income has significantly decreased by 62.6% when compared to the same quarter one year ago, falling from $13.20 million to $4.93 million.