NEW YORK ( TheStreet) -- International Rectifier (NYSE: IRF) has been downgraded by TheStreet Ratings from buy 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 unimpressive growth in net income, weak operating cash flow and a generally disappointing performance in the stock itself. Highlights from the ratings report include:
- IRF's revenue growth trails the industry average of 22.4%. Since the same quarter one year prior, revenues slightly increased by 7.8%. 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.
- IRF 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, IRF has a quick ratio of 2.43, which demonstrates the ability of the company to cover short-term liquidity needs.
- 44.40% is the gross profit margin for INTL RECTIFIER CORP which we consider to be strong. Regardless of IRF's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, IRF's net profit margin of 7.30% is significantly lower than the same period one year prior.
- The share price of INTL RECTIFIER CORP has not done very well: it is down 24.73% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 34.4% when compared to the same quarter one year ago, falling from $33.50 million to $21.96 million.