NEW YORK ( TheStreet) -- Applied Materials (Nasdaq: AMAT) 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 impressive record of earnings per share growth. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year. Highlights from the ratings report include:
- AMAT's revenue growth has slightly outpaced the industry average of 8.9%. Since the same quarter one year prior, revenues rose by 10.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Although AMAT's debt-to-equity ratio of 0.23 is very low, it is currently higher than that of the industry average. To add to this, AMAT has a quick ratio of 2.31, which demonstrates the ability of the company to cover short-term liquidity needs.
- 44.60% is the gross profit margin for APPLIED MATERIALS INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 17.10% trails the industry average.
- 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 Semiconductors & Semiconductor Equipment industry and the overall market on the basis of return on equity, APPLIED MATERIALS INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- AMAT has underperformed the S&P 500 Index, declining 9.08% from its price level of one year ago. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.