NEW YORK ( TheStreet) -- Calamos Asset Management (Nasdaq: CLMS) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its increase in net income, largely solid financial position with reasonable debt levels by most measures and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and a generally disappointing performance in the stock itself. Highlights from the ratings report include:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Capital Markets industry. The net income increased by 52.0% when compared to the same quarter one year prior, rising from $4.63 million to $7.04 million.
- The current debt-to-equity ratio, 0.48, is low and is below the industry average, implying that there has been successful management of debt levels. Along with this, the company maintains a quick ratio of 3.80, which clearly demonstrates the ability to cover short-term cash needs.
- CALAMOS ASSET MANAGEMENT INC has improved earnings per share by 47.8% 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, CALAMOS ASSET MANAGEMENT INC reported lower earnings of $0.77 versus $0.98 in the prior year. This year, the market expects an improvement in earnings ($1.03 versus $0.77).
- CLMS has underperformed the S&P 500 Index, declining 24.02% 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's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Capital Markets industry and the overall market, CALAMOS ASSET MANAGEMENT INC's return on equity is below that of both the industry average and the S&P 500.
-- Written by a member of TheStreet Ratings Staff