NEW YORK ( TheStreet) -- FSI International (Nasdaq: FSII) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:
  • FSII's revenue growth trails the industry average of 17.1%. Since the same quarter one year prior, revenues slightly increased by 3.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • FSII 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, FSII has a quick ratio of 2.14, which demonstrates the ability of the company to cover short-term liquidity needs.
  • 36.30% is the gross profit margin for FSI INTL INC which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, FSII's net profit margin of 6.10% is significantly lower than the same period one year prior.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. In comparison to the other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, FSI INTL INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • Net operating cash flow has significantly decreased to -$6.75 million or 177.73% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

FSI International, Inc. designs, manufactures, markets, and supports equipment used in the fabrication of microelectronics, such as advanced semiconductor devices. The company has a P/E ratio of 11.6, above the average electronics industry P/E ratio of 6.8 and below the S&P 500 P/E ratio of 17.7. FSI International has a market cap of $94.1 million and is part of the technology sector and electronics industry. Shares are down 45% year to date as of the close of trading on Wednesday.

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