NEW YORK ( TheStreet) -- Hurco Companies (Nasdaq: HURC) 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, largely solid financial position with reasonable debt levels by most measures and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and poor profit margins. Highlights from the ratings report include:
- HURC's very impressive revenue growth greatly exceeded the industry average of 35.6%. Since the same quarter one year prior, revenues leaped by 72.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- HURC's debt-to-equity ratio is very low at 0.01 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 1.38, which illustrates the ability to avoid short-term cash problems.
- HURCO COMPANIES INC reported significant earnings per share improvement in the most recent quarter compared to 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, HURCO COMPANIES INC reported poor results of -$0.89 versus -$0.36 in the prior year. This year, the market expects an improvement in earnings ($1.50 versus -$0.89).
- The gross profit margin for HURCO COMPANIES INC is currently lower than what is desirable, coming in at 33.00%. Regardless of HURC's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 5.60% trails the industry average.
- Net operating cash flow has significantly decreased to -$2.46 million or 155.57% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.