NEW YORK ( TheStreet) -- Calix (NYSE: CALX) has been upgraded by TheStreet Ratings from sell 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 expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself. Highlights from the ratings report include:
- CALX 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 the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.30, which illustrates the ability to avoid short-term cash problems.
- Net operating cash flow has significantly increased by 632.16% to $5.85 million when compared to the same quarter last year. In addition, CALIX INC has also vastly surpassed the industry average cash flow growth rate of 113.75%.
- 44.90% is the gross profit margin for CALIX INC which we consider to be strong. Regardless of CALX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CALX's net profit margin of -5.70% significantly underperformed when compared to the industry average.
- 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 Communications Equipment industry. The net income has significantly decreased by 606.5% when compared to the same quarter one year ago, falling from -$0.74 million to -$5.21 million.
- 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. Compared to other companies in the Communications Equipment industry and the overall market, CALIX INC's return on equity significantly trails that of both the industry average and the S&P 500.
-- Written by a member of TheStreet RatingsStaff