NEW YORK ( TheStreet) -- Zoltek Companies (Nasdaq: ZOLT) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and poor profit margins. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 1.4%. Since the same quarter one year prior, revenues rose by 26.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- ZOLT's debt-to-equity ratio is very low at 0.03 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, ZOLT has a quick ratio of 2.13, which demonstrates the ability of the company to cover short-term liquidity needs.
- The gross profit margin for ZOLTEK COS INC is currently lower than what is desirable, coming in at 32.70%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 7.10% trails the industry average.
- ZOLT has underperformed the S&P 500 Index, declining 11.99% from its price level of one year ago. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
-- Written by a member of TheStreet Ratings Staff