NEW YORK ( TheStreet) -- Hurco Companies (Nasdaq: HURC) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and poor profit margins. Highlights from the ratings report include:
- HURC's revenue growth has slightly outpaced the industry average of 31.9%. Since the same quarter one year prior, revenues rose by 39.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- HURC's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.28, which illustrates the ability to avoid short-term cash problems.
- The gross profit margin for HURCO COMPANIES INC is currently lower than what is desirable, coming in at 34.50%. Regardless of HURC's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 5.50% trails the industry average.
- HURC has underperformed the S&P 500 Index, declining 7.99% from its price level of one year ago. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.