NEW YORK ( TheStreet) -- Warwick Valley Telephone Company (Nasdaq: WWVY) 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 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:
  • WWVY's debt-to-equity ratio is very low at 0.05 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, WWVY has a quick ratio of 2.16, which demonstrates the ability of the company to cover short-term liquidity needs.
  • 49.30% is the gross profit margin for WARWICK VALLEY TELEPHONE CO which we consider to be strong. Regardless of WWVY's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, WWVY's net profit margin of -4.10% significantly underperformed when compared to the industry average.
  • WARWICK VALLEY TELEPHONE CO has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. During the past fiscal year, WARWICK VALLEY TELEPHONE CO reported lower earnings of $0.51 versus $1.26 in the prior year.
  • 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 Diversified Telecommunication Services industry. The net income has significantly decreased by 127.4% when compared to the same quarter one year ago, falling from $0.88 million to -$0.24 million.

Warwick Valley Telephone Company provides communication services to the residential and business customers. It operates in two segments, telephone and online. The company has a P/E ratio of 46.8, below the average telecommunications industry P/E ratio of 48.4 and above the S&P 500 P/E ratio of 17.7. Warwick Valley Telephone has a market cap of $76.9 million and is part of the technology sector and telecommunications industry. Shares are up 0.4% year to date as of the close of trading on Tuesday.

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