NEW YORK ( TheStreet) -- Harmonic (Nasdaq: HLIT) has been upgraded by TheStreet Ratings from sell 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 impressive record of earnings per share growth. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year. Highlights from the ratings report include:
- HLIT's revenue growth has slightly outpaced the industry average of 0.8%. Since the same quarter one year prior, revenues slightly increased by 3.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- HLIT 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, HLIT has a quick ratio of 2.41, which demonstrates the ability of the company to cover short-term liquidity needs.
- The gross profit margin for HARMONIC INC is rather high; currently it is at 52.80%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, HLIT's net profit margin of 3.00% significantly trails the industry average.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Communications Equipment industry and the overall market, HARMONIC INC's return on equity significantly trails that of both the industry average and the S&P 500.
- HLIT's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 30.34%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.