NEW YORK ( TheStreet) -- optionsXpress Holdings (Nasdaq: OXPS) 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, notable return on equity and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and deteriorating net income. Highlights from the ratings report include:
- The debt-to-equity ratio is somewhat low, currently at 0.86, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Capital Markets industry and the overall market, OPTIONSXPRESS HOLDINGS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- 36.20% is the gross profit margin for OPTIONSXPRESS HOLDINGS INC which we consider to be strong. Regardless of OXPS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, OXPS's net profit margin of 15.40% compares favorably to the industry average.
- 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 Capital Markets industry. The net income has significantly decreased by 43.3% when compared to the same quarter one year ago, falling from $15.59 million to $8.84 million.
- Net operating cash flow has significantly decreased to -$50.83 million or 641.79% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.