NEW YORK ( TheStreet) -- AAON (Nasdaq: AAON) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, poor profit margins and disappointing return on equity. Highlights from the ratings report include:
- AAON's debt-to-equity ratio is very low at 0.04 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.14, which illustrates the ability to avoid short-term cash problems.
- Net operating cash flow has significantly increased by 79.35% to $15.21 million when compared to the same quarter last year. In addition, AAON INC has also vastly surpassed the industry average cash flow growth rate of 4.53%.
- AAON, with its decline in revenue, slightly underperformed the industry average of 2.5%. Since the same quarter one year prior, revenues slightly dropped by 3.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The gross profit margin for AAON INC is rather low; currently it is at 18.70%. It has decreased from the same quarter the previous year.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Building Products industry. The net income has significantly decreased by 84.9% when compared to the same quarter one year ago, falling from $5.78 million to $0.87 million.
-- Written by a member of TheStreet Ratings Staff