Ceradyne Inc. Stock Downgraded (CRDN)

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.

Highlights from the ratings report include:
  • 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.

Ceradyne, Inc. engages in the development, manufacture, and market of technical ceramic products, ceramic powders, and components in the United States and internationally. The company has a P/E ratio of 9.4, equal to the average industrial industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Ceradyne has a market cap of $590.5 million and is part of the industrial goods sector and industrial industry. Shares are down 9.2% year to date as of the close of trading on Tuesday.

You can view the full Ceradyne 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

Ceradyne Inc. Stock Downgraded (CRDN)

Ceradyne Inc. Stock Upgraded (CRDN)

Stocks Close Mixed as Bernanke's Speech Weighs

Cramer Quick Take: 3M Is a Buy

Cramer: 3M Is A Buy