NEW YORK ( TheStreet) -- Astec Industries (Nasdaq: ASTE) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, robust revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we find that the company's profit margins have been poor overall. Highlights from the ratings report include:
- Despite its growing revenue, the company underperformed as compared with the industry average of 23.1%. Since the same quarter one year prior, revenues rose by 20.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- ASTE 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. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.11, which illustrates the ability to avoid short-term cash problems.
- The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. 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.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Machinery industry and the overall market, ASTEC INDUSTRIES INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- The gross profit margin for ASTEC INDUSTRIES INC is rather low; currently it is at 21.60%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 3.60% trails that of the industry average.