NEW YORK ( TheStreet) -- Steinway Musical Instruments (NYSE: LVB) 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 increase in net income. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, disappointing return on equity and poor profit margins. Highlights from the ratings report include:
- LVB's revenue growth has slightly outpaced the industry average of 2.2%. Since the same quarter one year prior, revenues slightly increased by 6.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The current debt-to-equity ratio, 0.30, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, LVB has a quick ratio of 1.78, which demonstrates the ability of the company to cover short-term liquidity needs.
- Net operating cash flow has increased to -$7.72 million or 25.25% when compared to the same quarter last year. Despite an increase in cash flow of 25.25%, STEINWAY MUSICAL INSTRS INC is still growing at a significantly lower rate than the industry average of 82.64%.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Leisure Equipment & Products industry and the overall market, STEINWAY MUSICAL INSTRS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for STEINWAY MUSICAL INSTRS INC is currently lower than what is desirable, coming in at 32.30%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.80% trails that of the industry average.
-- Written by a member of TheStreet Ratings Staff