NEW YORK ( TheStreet) -- Insituform Technologies (Nasdaq: INSU) 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 and good cash flow from operations. 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:
  • Although INSU's debt-to-equity ratio of 0.19 is very low, it is currently higher than that of the industry average. To add to this, INSU has a quick ratio of 2.44, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has slightly increased to $10.28 million or 7.67% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -39.60%.
  • INSU, with its decline in revenue, underperformed when compared the industry average of 18.4%. Since the same quarter one year prior, revenues slightly dropped by 2.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • 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. When compared to other companies in the Construction & Engineering industry and the overall market, INSITUFORM TECHNOLOGIES's return on equity is below 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 Construction & Engineering industry. The net income has significantly decreased by 51.6% when compared to the same quarter one year ago, falling from $15.78 million to $7.63 million.

Insituform Technologies, Inc., through its subsidiaries, provides proprietary technologies and services for rehabilitating sewer, water, energy, and mining piping systems and the corrosion protection of industrial pipelines in North America and internationally. The company has a P/E ratio of 13, equal to the average materials & construction industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Insituform has a market cap of $611.4 million and is part of the industrial goods sector and materials & construction industry. Shares are down 42.9% year to date as of the close of trading on Thursday.

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