NEW YORK ( TheStreet) -- American Science & Engineering (Nasdaq: ASEI) 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, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, disappointing return on equity and a generally disappointing performance in the stock itself. Highlights from the ratings report include:
- ASEI's debt-to-equity ratio is very low at 0.02 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.64, which clearly demonstrates the ability to cover short-term cash needs.
- 49.80% is the gross profit margin for AMERICAN SCIENCE ENGINEERING which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 11.10% is above that of the industry average.
- ASEI, with its decline in revenue, slightly underperformed the industry average of 2.4%. Since the same quarter one year prior, revenues slightly dropped by 4.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Aerospace & Defense industry and the overall market on the basis of return on equity, AMERICAN SCIENCE ENGINEERING has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- 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 Aerospace & Defense industry. The net income has decreased by 16.3% when compared to the same quarter one year ago, dropping from $6.80 million to $5.69 million.