NEW YORK ( TheStreet) -- KSW (Nasdaq: KSW) 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, attractive valuation levels 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 poor profit margins.

Highlights from the ratings report include:
  • KSW's debt-to-equity ratio is very low at 0.05 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, KSW has a quick ratio of 1.97, which demonstrates the ability of the company to cover short-term liquidity needs.
  • After a year of stock price fluctuations, the net result is that KSW's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. 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 gross profit margin for KSW INC is currently extremely low, coming in at 9.60%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.40% trails that of the industry average.
  • Net operating cash flow has significantly decreased to $0.53 million or 63.00% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

KSW, Inc., through its subsidiary, KSW Mechanical Services, Inc. The company has a P/E ratio of 15, above the average materials & construction industry P/E ratio of 14.3 and below the S&P 500 P/E ratio of 17.7. KSW has a market cap of $21 million and is part of the industrial goods sector and materials & construction industry. Shares are down 9.6% year to date as of the close of trading on Tuesday.

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