NEW YORK ( TheStreet) -- Sauer-Danfoss (NYSE: SHS) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. 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:
  • Powered by its strong earnings growth of 78.78% and other important driving factors, this stock has surged by 75.29% over the past year, outperforming the rise in the S&P 500 Index during the same period. Although SHS had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
  • SAUER-DANFOSS INC reported significant earnings per share improvement 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. During the past fiscal year, SAUER-DANFOSS INC turned its bottom line around by earning $4.40 versus -$7.15 in the prior year.
  • 36.50% is the gross profit margin for SAUER-DANFOSS INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 11.80% is above that of the industry average.
  • Net operating cash flow has increased to $114.09 million or 37.03% when compared to the same quarter last year. Despite an increase in cash flow of 37.03%, SAUER-DANFOSS INC is still growing at a significantly lower rate than the industry average of 89.52%.

Sauer-Danfoss Inc. designs, manufactures, and markets hydraulic, electronic, and mechanical components, as well as software and integrated systems that generate, transmit, and control power in mobile equipment. The company has a P/E ratio of 6.6, above the average industrial industry P/E ratio of 6.3 and below the S&P 500 P/E ratio of 17.7. Sauer-Danfoss has a market cap of $1.9 billion and is part of the industrial goods sector and industrial industry. Shares are up 41.4% year to date as of the close of trading on Friday.

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