NEW YORK ( TheStreet) -- Staar Surgical (Nasdaq: STAA) 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, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, premium valuation and weak operating cash flow. Highlights from the ratings report include:
- STAA's revenue growth has slightly outpaced the industry average of 4.5%. Since the same quarter one year prior, revenues slightly increased by 4.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- STAA's debt-to-equity ratio is very low at 0.13 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, STAA has a quick ratio of 1.98, which demonstrates the ability of the company to cover short-term liquidity needs.
- The gross profit margin for STAAR SURGICAL CO is currently very high, coming in at 73.50%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, STAA's net profit margin of 1.50% significantly trails the industry average.
- Net operating cash flow has significantly decreased to -$0.44 million or 179.45% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Health Care Equipment & Supplies industry average. The net income has decreased by 22.7% when compared to the same quarter one year ago, dropping from $0.30 million to $0.23 million.
-- Written by a member of TheStreet Ratings Staff