NEW YORK ( TheStreet) -- FLIR Systems (Nasdaq: FLIR) 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, expanding profit margins and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, weak operating cash flow and disappointing return on equity. Highlights from the ratings report include:
- FLIR's debt-to-equity ratio is very low at 0.15 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.60, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for FLIR SYSTEMS INC is rather high; currently it is at 56.80%. Regardless of FLIR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, FLIR's net profit margin of 13.80% compares favorably to the industry average.
- Net operating cash flow has decreased to $49.00 million or 21.46% 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.
- Looking at the price performance of FLIR's shares over the past 12 months, there is not much good news to report: the stock is down 36.98%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, FLIR is still more expensive than most of the other companies in its industry.
-- Written by a member of TheStreet Ratings Staff