NEW YORK ( TheStreet) -- Charles River Laboratories International In (NYSE: CRL) 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, notable return on equity and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, generally poor debt management and a generally disappointing performance in the stock itself. Highlights from the ratings report include:
- CRL's revenue growth trails the industry average of 10.2%. Since the same quarter one year prior, revenues slightly increased by 0.0%. 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 company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Life Sciences Tools & Services industry and the overall market, CHARLES RIVER LABS INTL INC's return on equity exceeds that of both the industry average and the S&P 500.
- CHARLES RIVER LABS INTL INC's earnings per share declined by 16.9% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CHARLES RIVER LABS INTL INC turned its bottom line around by earning $2.23 versus -$5.81 in the prior year. This year, the market expects an improvement in earnings ($2.69 versus $2.23).
- Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, CRL has underperformed the S&P 500 Index, declining 15.77% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- 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 Life Sciences Tools & Services industry average. The net income has decreased by 15.6% when compared to the same quarter one year ago, dropping from $31.34 million to $26.44 million.
-- Written by a member of TheStreet Ratings Staff