Orbotech Ltd. Stock Upgraded (ORBK)

NEW YORK ( TheStreet) -- Orbotech (Nasdaq: ORBK) has been upgraded by TheStreet Ratings from hold to buy. 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, reasonable valuation levels and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 5.5%. Since the same quarter one year prior, revenues slightly increased by 3.9%. 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.
  • ORBK's debt-to-equity ratio is very low at 0.20 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.33, which clearly demonstrates the ability to cover short-term cash needs.
  • 42.80% is the gross profit margin for ORBOTECH LTD which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 1.90% trails the industry average.
  • ORBOTECH LTD has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, ORBOTECH LTD reported lower earnings of $1.15 versus $1.20 in the prior year. This year, the market expects an improvement in earnings ($1.38 versus $1.15).
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Orbotech Ltd. engages in the design, development, manufacture, marketing, and service of yield-enhancing and production solutions for specialized applications in the supply chain of the electronics industry. The company has a P/E ratio of 6.5, below the average electronics industry P/E ratio of 9.5 and below the S&P 500 P/E ratio of 17.7. Orbotech has a market cap of $468.5 million and is part of the technology sector and electronics industry. Shares are up 10.7% year to date as of the close of trading on Tuesday.

You can view the full Orbotech Ratings Report or get investment ideas from our investment research center.
-- Written by a member of TheStreet RatingsStaff

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