NEW YORK ( TheStreet) -- Comtech Telecommunications Corporation (Nasdaq: CMTL) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, expanding profit margins and solid stock price performance. 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:
- 47.40% is the gross profit margin for COMTECH TELECOMMUN which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 11.10% trails the industry average.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- 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. When compared to other companies in the Communications Equipment industry and the overall market, COMTECH TELECOMMUN's return on equity is below that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to -$0.77 million or 104.00% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.