NEW YORK ( TheStreet) -- ClearOne Communications Corporation (Nasdaq: CLRO) 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 solid stock price performance. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 10.8%. Since the same quarter one year prior, revenues rose by 19.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • CLRO has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, CLRO has a quick ratio of 2.45, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The gross profit margin for CLEARONE COMMUNICATIONS INC is rather high; currently it is at 62.60%. 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 11.10% trails the industry average.
  • 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 Communications Equipment industry and the overall market, CLEARONE COMMUNICATIONS INC's return on equity is below that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$1.70 million or 191.80% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

ClearOne Communications, Inc. operates as a communications solutions company that develops and sells audio conferencing, collaboration, streaming media, and connectivity systems and other related products for audio, video, and Web applications. The company has a P/E ratio of 11.2, equal to the average telecommunications industry P/E ratio and below the S&P 500 P/E ratio of 17.7. ClearOne has a market cap of $44.5 million and is part of the technology sector and telecommunications industry. Shares are up 28.5% year to date as of the close of trading on Wednesday.

You can view the full ClearOne Ratings Report or get investment ideas from our investment research center.
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ClearOne Communications Corporation Stock Upgraded (CLRO)