NEW YORK ( TheStreet) -- Zoltek Companies (Nasdaq: ZOLT) has been upgraded by TheStreet Ratings from sell 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 weak operating cash flow, a generally disappointing performance in the stock itself and poor profit margins. Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 8.1%. Since the same quarter one year prior, revenues rose by 38.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- ZOLT's debt-to-equity ratio is very low at 0.03 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, ZOLT has a quick ratio of 1.72, which demonstrates the ability of the company to cover short-term liquidity needs.
- ZOLT has underperformed the S&P 500 Index, declining 23.99% from its price level of one year ago. 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.
- Net operating cash flow has significantly decreased to -$0.06 million or 100.51% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.