NEW YORK ( TheStreet) -- Consolidated Graphics (NYSE: CGX) has been downgraded by TheStreet Ratings from buy to hold. Among the primary strengths of the company is its solid financial position based on a variety of debt and liquidity measures that we have evaluated. At the same time, however, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity. Highlights from the ratings report include:
- The current debt-to-equity ratio, 0.60, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.92 is somewhat weak and could be cause for future problems.
- CGX, with its decline in revenue, slightly underperformed the industry average of 2.2%. Since the same quarter one year prior, revenues slightly dropped by 2.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- CONSOLIDATED GRAPHICS INC 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, CONSOLIDATED GRAPHICS INC reported lower earnings of $1.30 versus $3.56 in the prior year. This year, the market expects an improvement in earnings ($4.36 versus $1.30).
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. In comparison to the other companies in the Commercial Services & Supplies industry and the overall market, CONSOLIDATED GRAPHICS INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- The gross profit margin for CONSOLIDATED GRAPHICS INC is currently lower than what is desirable, coming in at 29.70%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -2.30% trails that of the industry average.
-- Written by a member of TheStreet Ratings Staff