NEW YORK ( TheStreet) -- Ceradyne (Nasdaq: CRDN) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and a generally disappointing performance in the stock itself.
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- CRDN's debt-to-equity ratio is very low at 0.13 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, CRDN has a quick ratio of 2.22, which demonstrates the ability of the company to cover short-term liquidity needs.
- 36.00% is the gross profit margin for CERADYNE INC which we consider to be strong. Regardless of CRDN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 3.60% trails the industry average.
- The revenue fell significantly faster than the industry average of 5.3%. Since the same quarter one year prior, revenues fell by 29.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Aerospace & Defense industry. The net income has significantly decreased by 84.0% when compared to the same quarter one year ago, falling from $23.60 million to $3.78 million.
- Net operating cash flow has significantly decreased to $6.41 million or 63.88% 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