NEW YORK ( TheStreet) -- Ducommun (NYSE: DCO) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, weak operating cash flow and generally weak debt management. Highlights from the ratings report include:
- 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 Aerospace & Defense industry. The net income has significantly decreased by 1266.0% when compared to the same quarter one year ago, falling from $4.16 million to -$48.49 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Aerospace & Defense industry and the overall market, DUCOMMUN INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for DUCOMMUN INC is rather low; currently it is at 21.50%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -25.80% is significantly below that of the industry average.
- Net operating cash flow has decreased to $25.89 million or 11.27% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Currently the debt-to-equity ratio of 1.92 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Even though the debt-to-equity ratio is weak, DCO's quick ratio is somewhat strong at 1.21, demonstrating the ability to handle short-term liquidity needs.
-- Written by a member of TheStreet Ratings Staff