NEW YORK ( TheStreet) -- Atlantic Tele-Network (Nasdaq: ATNI) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its increase in net income, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and poor profit margins. Highlights from the ratings report include:
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Diversified Telecommunication Services industry average. The net income increased by 26.4% when compared to the same quarter one year prior, rising from $3.28 million to $4.15 million.
- The debt-to-equity ratio is somewhat low, currently at 0.96, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels.
- After a year of stock price fluctuations, the net result is that ATNI's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- The gross profit margin for ATLANTIC TELE-NETWORK INC is rather low; currently it is at 22.30%. Regardless of ATNI's low profit margin, it has managed to increase from the same period last year.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. In comparison to the other companies in the Diversified Telecommunication Services industry and the overall market, ATLANTIC TELE-NETWORK INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
-- Written by a member of TheStreet Ratings Staff