NEW YORK ( TheStreet) -- Kaydon Corporation (NYSE: KDN) has been downgraded by TheStreet Ratings from buy to hold. 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 and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity. Highlights from the ratings report include:
- KDN's revenue growth trails the industry average of 28.1%. Since the same quarter one year prior, revenues slightly increased by 3.0%. 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.
- KDN has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 6.14, which clearly demonstrates the ability to cover short-term cash needs.
- 38.30% is the gross profit margin for KAYDON CORP which we consider to be strong. Regardless of KDN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 8.00% trails the industry average.
- Net operating cash flow has decreased to $19.61 million or 28.61% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, KAYDON CORP has marginally lower results.
- Looking at the price performance of KDN's shares over the past 12 months, there is not much good news to report: the stock is down 33.05%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
-- Written by a member of TheStreet Ratings Staff