NEW YORK ( TheStreet) -- Rofin-Sinar Technologies Incorporated (Nasdaq: RSTI) 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 also find weaknesses including relatively poor performance when compared with the S&P 500 during the past year and weak operating cash flow. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 15.8%. Since the same quarter one year prior, revenues rose by 40.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- RSTI'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, RSTI has a quick ratio of 1.81, which demonstrates the ability of the company to cover short-term liquidity needs.
- Net operating cash flow has decreased to $8.70 million or 40.19% when compared to the same quarter last year. Despite a decrease in cash flow of 40.19%, ROFIN SINAR TECHNOLOGIES INC is in line with the industry average cash flow growth rate of -50.02%.
- In its most recent trading session, RSTI has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. 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.