NEW YORK ( TheStreet) -- Siemens (NYSE: SI) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its notable return on equity and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including poor profit margins, weak operating cash flow and a generally disappointing performance in the stock itself. Highlights from the ratings report include:
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Industrial Conglomerates industry and the overall market, SIEMENS AG's return on equity exceeds that of both the industry average and the S&P 500.
- The current debt-to-equity ratio, 0.52, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that SI's debt-to-equity ratio is low, the quick ratio, which is currently 0.61, displays a potential problem in covering short-term cash needs.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 6.2%. Since the same quarter one year prior, revenues slightly dropped by 0.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The gross profit margin for SIEMENS AG is currently lower than what is desirable, coming in at 32.00%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 8.00% trails that of the industry average.
- Net operating cash flow has significantly decreased to -$952.00 million or 150.95% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.