NEW YORK ( TheStreet) -- Orbotech (Nasdaq: ORBK) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and revenue 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:
  • ORBOTECH LTD has improved earnings per share by 15.4% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, ORBOTECH LTD turned its bottom line around by earning $1.25 versus -$0.46 in the prior year. This year, the market expects an improvement in earnings ($1.44 versus $1.25).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Electronic Equipment, Instruments & Components industry. The net income increased by 52.4% when compared to the same quarter one year prior, rising from $12.40 million to $18.89 million.
  • 43.00% is the gross profit margin for ORBOTECH LTD which we consider to be strong. Regardless of ORBK's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ORBK's net profit margin of 12.30% compares favorably to the industry average.
  • After a year of stock price fluctuations, the net result is that ORBK's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. 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.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, ORBOTECH LTD's return on equity is below that of both the industry average and the S&P 500.

Orbotech Ltd. engages in the design, development, manufacture, marketing, and service of yield-enhancing and production solutions for specialized applications in the supply chain of the electronics industry. The company has a P/E ratio of 4.8, below the average electronics industry P/E ratio of 7.6 and below the S&P 500 P/E ratio of 17.7. Orbotech has a market cap of $415.9 million and is part of the technology sector and electronics industry. Shares are down 25.9% year to date as of the close of trading on Monday.

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