NEW YORK ( TheStreet) -- Coherent (Nasdaq: COHR) 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 impressive record of earnings per share growth. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 15.9%. Since the same quarter one year prior, revenues rose by 26.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • COHR's debt-to-equity ratio is very low at 0.00 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, COHR has a quick ratio of 2.34, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry, implying reduced upside potential.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, COHERENT INC's return on equity is below that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $18.39 million or 17.01% when compared to the same quarter last year. Despite a decrease in cash flow COHERENT INC is still fairing well by exceeding its industry average cash flow growth rate of -49.03%.

Coherent, Inc. provides photonics-based solutions for commercial and scientific research applications worldwide. It engages in the design, manufacture, servicing, and marketing of lasers, laser tools, precision optics, and related accessories. The company has a P/E ratio of 14.7, equal to the average electronics industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Coherent has a market cap of $1 billion and is part of the technology sector and electronics industry. Shares are down 8.3% year to date as of the close of trading on Thursday.

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