NEW YORK ( TheStreet) -- GrafTech International (NYSE: GTI) 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 and largely solid financial position with reasonable debt levels by most measures. 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:
  • The revenue growth came in higher than the industry average of 14.4%. Since the same quarter one year prior, revenues rose by 25.6%. 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.
  • GTI's debt-to-equity ratio is very low at 0.27 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 1.12, which illustrates the ability to avoid short-term cash problems.
  • GRAFTECH INTERNATIONAL LTD's earnings per share declined by 41.2% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, GRAFTECH INTERNATIONAL LTD increased its bottom line by earning $1.40 versus $0.10 in the prior year. For the next year, the market is expecting a contraction of 31.4% in earnings ($0.96 versus $1.40).
  • The gross profit margin for GRAFTECH INTERNATIONAL LTD is currently lower than what is desirable, coming in at 30.50%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 8.90% trails that of the industry average.
  • Net operating cash flow has significantly decreased to -$16.87 million or 159.25% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

GrafTech International Ltd. manufactures graphite and carbon material science-based solutions. The company operates in two segments, Industrial Materials and Engineered Solutions. The company has a P/E ratio of 12.2, above the average industrial industry P/E ratio of 11.7 and below the S&P 500 P/E ratio of 17.7. GrafTech International has a market cap of $2.1 billion and is part of the industrial goods sector and industrial industry. Shares are down 28.2% year to date as of the close of trading on Thursday.

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