NEW YORK ( TheStreet) -- GSI Technology (Nasdaq: GSIT) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:
  • GSIT 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 this, the company maintains a quick ratio of 4.73, which clearly demonstrates the ability to cover short-term cash needs.
  • 46.90% is the gross profit margin for GSI TECHNOLOGY INC which we consider to be strong. Regardless of GSIT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, GSIT's net profit margin of 8.00% is significantly lower than the same period one year prior.
  • Net operating cash flow has significantly decreased to -$0.33 million or 107.67% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • 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 Semiconductors & Semiconductor Equipment industry and the overall market, GSI TECHNOLOGY INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.

GSI Technology, Inc. designs, develops, and markets static random access memory (SRAM) products for the networking and telecommunications markets primarily in the United States, China, Malaysia, and Singapore. The company has a P/E ratio of 10, above the average electronics industry P/E ratio of 9.8 and below the S&P 500 P/E ratio of 17.7. GSI Technology has a market cap of $134.9 million and is part of the technology sector and electronics industry. Shares are down 41.1% year to date as of the close of trading on Friday.

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