AAON Inc. Stock Downgraded (AAON)

NEW YORK ( TheStreet) -- AAON (Nasdaq: AAON) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including poor profit margins, weak operating cash flow and feeble growth in the company's earnings per share.

Highlights from the ratings report include:
  • AAON's revenue growth has slightly outpaced the industry average of 4.2%. Since the same quarter one year prior, revenues slightly increased by 7.0%. 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.
  • AAON's debt-to-equity ratio is very low at 0.06 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.81 is somewhat weak and could be cause for future problems.
  • Net operating cash flow has declined marginally to $8.76 million or 8.97% when compared to the same quarter last year. Despite a decrease in cash flow AAON INC is still fairing well by exceeding its industry average cash flow growth rate of -48.66%.
  • The gross profit margin for AAON INC is rather low; currently it is at 21.00%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 5.60% is above that of the industry average.

AAON, Inc., together with its subsidiaries, engages in the manufacture and sale of air conditioning and heating equipment primarily in the United States and Canada. The company has a P/E ratio of 23.6, below the average materials & construction industry P/E ratio of 23.8 and above the S&P 500 P/E ratio of 17.7. AAON has a market cap of $431.6 million and is part of the industrial goods sector and materials & construction industry. Shares are down 6.9% year to date as of the close of trading on Thursday.

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

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