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.
-- Written by a member of TheStreet Ratings Staff