NEW YORK ( TheStreet) -- Hurco Companies (Nasdaq: HURC) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and revenue growth. However, as a counter to these strengths, we also find weaknesses including poor profit margins and a generally disappointing performance in the stock itself. Highlights from the ratings report include:
- HURCO COMPANIES INC has improved earnings per share by 25.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, HURCO COMPANIES INC turned its bottom line around by earning $1.71 versus -$0.89 in the prior year. This year, the market expects an improvement in earnings ($2.59 versus $1.71).
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Machinery industry average. The net income increased by 26.1% when compared to the same quarter one year prior, rising from $2.35 million to $2.96 million.
- HURC'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 31.26%, 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. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- The gross profit margin for HURCO COMPANIES INC is currently lower than what is desirable, coming in at 31.70%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 6.40% trails that of the industry average.
-- Written by a member of TheStreet Ratings Staff