NEW YORK ( TheStreet) -- ATA (Nasdaq: ATAI) 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 impressive record of earnings per share growth. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 1.9%. Since the same quarter one year prior, revenues rose by 12.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- ATAI has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 3.52, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for ATA INC -ADS is rather high; currently it is at 52.60%. Regardless of ATAI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ATAI's net profit margin of 26.30% significantly outperformed against the industry.
- 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. In comparison to the other companies in the Diversified Consumer Services industry and the overall market, ATA INC -ADS's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- ATAI's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 31.87%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
-- Written by a member of TheStreet Ratings Staff