NEW YORK ( TheStreet) -- FLIR Systems (Nasdaq: FLIR) 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 expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, premium valuation and weak operating cash flow.

Highlights from the ratings report include:
  • FLIR's revenue growth has slightly outpaced the industry average of 15.9%. Since the same quarter one year prior, revenues rose by 17.8%. 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.
  • FLIR has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 2.50, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for FLIR SYSTEMS INC is rather high; currently it is at 58.50%. Regardless of FLIR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, FLIR's net profit margin of 7.50% compares favorably to the industry average.
  • Net operating cash flow has significantly decreased to $19.41 million or 54.53% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, FLIR SYSTEMS INC has marginally lower results.
  • The share price of FLIR SYSTEMS INC has not done very well: it is down 7.10% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.

FLIR Systems, Inc. designs, manufactures, and markets thermal imaging systems worldwide. The company operates through two divisions, Commercial Systems and Government Systems. The company has a P/E ratio of 16.9, equal to the average aerospace/defense industry P/E ratio and below the S&P 500 P/E ratio of 17.7. FLIR Systems has a market cap of $3.6 billion and is part of the industrial goods sector and aerospace/defense industry. Shares are down 21.2% year to date as of the close of trading on Wednesday.

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

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