NEW YORK ( TheStreet) -- Windstream (Nasdaq: WIN) 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 and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including generally poor debt management, disappointing return on equity and premium valuation. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 4.6%. Since the same quarter one year prior, revenues rose by 23.3%. 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.
- 48.40% is the gross profit margin for WINDSTREAM CORP which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year.
- The change in net income from the same quarter one year ago has significantly exceeded that of the Diversified Telecommunication Services industry average, but is less than that of the S&P 500. The net income has significantly decreased by 144.1% when compared to the same quarter one year ago, falling from $72.40 million to -$31.90 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. In comparison to the other companies in the Diversified Telecommunication Services industry and the overall market, WINDSTREAM CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
-- Written by a member of TheStreet Ratings Staff