NEW YORK ( TheStreet) -- Anaren (Nasdaq: ANEN) has been downgraded by TheStreet Ratings from buy 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, reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow. Highlights from the ratings report include:
- ANEN 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 4.93, which clearly demonstrates the ability to cover short-term cash needs.
- 37.30% is the gross profit margin for ANAREN INC which we consider to be strong. Regardless of ANEN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ANEN's net profit margin of 3.30% is significantly lower than the same period one year prior.
- Net operating cash flow has decreased to $2.54 million or 11.57% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Communications Equipment industry and the overall market, ANAREN INC's return on equity is below that of both the industry average and the S&P 500.
-- Written by a member of TheStreet Ratings Staff