NEW YORK ( TheStreet) -- MetroPCS Communications (NYSE: PCS) 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, reasonable valuation levels and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and weak operating cash flow. Highlights from the ratings report include:
- Despite its growing revenue, the company underperformed as compared with the industry average of 9.6%. Since the same quarter one year prior, revenues slightly increased by 6.9%. 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.
- The gross profit margin for METROPCS COMMUNICATIONS INC is currently lower than what is desirable, coming in at 33.70%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.60% significantly trails 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 Wireless Telecommunication Services industry. The net income has significantly decreased by 62.7% when compared to the same quarter one year ago, falling from $56.38 million to $21.00 million.
-- Written by a member of TheStreet Ratings Staff