NEW YORK ( TheStreet) -- Luminex Corporation (Nasdaq: LMNX) 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 increase in net income. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 13.7%. Since the same quarter one year prior, revenues rose by 34.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • LMNX'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 6.30, which clearly demonstrates the ability to cover short-term cash needs.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. 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 gross profit margin for LUMINEX CORP is rather high; currently it is at 69.60%. Regardless of LMNX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 4.20% trails the industry average.
  • 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. In comparison to the other companies in the Life Sciences Tools & Services industry and the overall market, LUMINEX CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.

Luminex Corporation develops, manufactures, and sells proprietary biological testing technologies and products for the life sciences and diagnostic industries in the United States. The company has a P/E ratio of 63.4, below the average health services industry P/E ratio of 77.5 and above the S&P 500 P/E ratio of 17.7. Luminex has a market cap of $884.7 million and is part of the health care sector and health services industry. Shares are up 11.2% year to date as of the close of trading on Thursday.

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