NEW YORK ( TheStreet) -- SPX Corporation (NYSE: SPW) 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 and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins. Highlights from the ratings report include:
- SPW's revenue growth has slightly outpaced the industry average of 17.3%. Since the same quarter one year prior, revenues rose by 18.3%. 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.
- The debt-to-equity ratio is somewhat low, currently at 0.93, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.70 is somewhat weak and could be cause for future problems.
- SPX CORP has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, SPX CORP reported lower earnings of $3.43 versus $3.85 in the prior year. This year, the market expects an improvement in earnings ($4.55 versus $3.43).
- The gross profit margin for SPX CORP is currently lower than what is desirable, coming in at 27.50%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.20% trails that of the industry average.
- Net operating cash flow has significantly decreased to -$237.10 million or 554.97% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
-- Written by a member of TheStreet Ratings Staff