NEW YORK ( TheStreet) -- Pike Electric Corporation (NYSE: PIKE) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and poor profit margins. Highlights from the ratings report include:
- PIKE's revenue growth has slightly outpaced the industry average of 9.1%. Since the same quarter one year prior, revenues rose by 15.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- PIKE ELECTRIC CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, PIKE ELECTRIC CORP turned its bottom line around by earning $0.04 versus -$0.40 in the prior year. This year, the market expects an improvement in earnings ($0.42 versus $0.04).
- Despite currently having a low debt-to-equity ratio of 0.42, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that PIKE's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.95 is high and demonstrates strong liquidity.
- The gross profit margin for PIKE ELECTRIC CORP is rather low; currently it is at 20.40%. Regardless of PIKE's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, PIKE's net profit margin of 2.80% compares favorably to the industry average.
- PIKE has underperformed the S&P 500 Index, declining 16.57% from its price level of one year ago. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
-- Written by a member of TheStreet Ratings Staff