NEW YORK ( TheStreet) -- Global Power Equipment Group (Nasdaq: GLPW) 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, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, unimpressive growth in net income and poor profit margins.
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- The revenue growth came in higher than the industry average of 10.9%. Since the same quarter one year prior, revenues slightly increased by 0.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- GLPW 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 3.67, which clearly demonstrates the ability to cover short-term cash needs.
- GLOBAL POWER EQUIPMENT GROUP reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, GLOBAL POWER EQUIPMENT GROUP increased its bottom line by earning $3.70 versus $1.80 in the prior year. For the next year, the market is expecting a contraction of 74.3% in earnings ($0.95 versus $3.70).
- The change in net income from the same quarter one year ago has exceeded that of the Electrical Equipment industry average, but is less than that of the S&P 500. The net income has decreased by 6.9% when compared to the same quarter one year ago, dropping from $0.89 million to $0.83 million.
- GLPW has underperformed the S&P 500 Index, declining 18.46% from its price level of one year ago. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
-- Written by a member of TheStreet Ratings Staff