NEW YORK ( TheStreet) -- AVX Corporation (NYSE: AVX) has been downgraded by TheStreet Ratings from buy to hold. Among the primary strengths of the company is its solid financial position based on a variety of debt and liquidity measures that we have evaluated. At the same time, however, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.
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- AVX has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 3.33, which clearly demonstrates the ability to cover short-term cash needs.
- AVX, with its decline in revenue, underperformed when compared the industry average of 8.9%. Since the same quarter one year prior, revenues fell by 19.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 30.03%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 302.50% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, AVX CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for AVX CORP is rather low; currently it is at 19.50%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -38.70% is significantly below that of the industry average.
-- Written by a member of TheStreet Ratings Staff