Benchmark Electronics Stock Downgraded (BHE)

NEW YORK ( TheStreet) -- Benchmark Electronics (NYSE: BHE) 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 and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 9.1%. Since the same quarter one year prior, revenues rose by 10.2%. 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.
  • BHE's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, BHE has a quick ratio of 2.03, which demonstrates the ability of the company to cover short-term liquidity needs.
  • BENCHMARK ELECTRONICS INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, BENCHMARK ELECTRONICS INC reported lower earnings of $0.87 versus $1.28 in the prior year. This year, the market expects an improvement in earnings ($1.21 versus $0.87).
  • The gross profit margin for BENCHMARK ELECTRONICS INC is currently extremely low, coming in at 8.30%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.90% trails that of the industry average.
  • Net operating cash flow has significantly decreased to -$23.82 million or 268.06% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

Benchmark Electronics, Inc. provides electronics manufacturing services in the Americas, Asia, and Europe. The company has a P/E ratio of 18.8, equal to the average electronics industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Benchmark has a market cap of $800.8 million and is part of the technology sector and electronics industry. Shares are down 1.7% year to date as of the close of trading on Tuesday.

You can view the full Benchmark Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
null

If you liked this article you might like

So Far, So Good With This Year's 'Poor-Man's Value Portfolio'

So Far, So Good With This Year's 'Poor-Man's Value Portfolio'

Activist Investors May Use New Tax Law to Push for Big Stock Buybacks

Activist Investors May Use New Tax Law to Push for Big Stock Buybacks

Introducing My 2018 Double Net Value Portfolio

Introducing My 2018 Double Net Value Portfolio

Time to Close the Books on My 2017 Double Net Value Portfolio

Time to Close the Books on My 2017 Double Net Value Portfolio

These Are the Biggest Winners and Losers in Activist Investing This Year

These Are the Biggest Winners and Losers in Activist Investing This Year