NEW YORK ( TheStreet) -- Hollysys Automation Technologies (Nasdaq: HOLI) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.
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- The revenue growth came in higher than the industry average of 8.7%. Since the same quarter one year prior, revenues rose by 18.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- HOLI's debt-to-equity ratio is very low at 0.12 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, HOLI has a quick ratio of 2.20, which demonstrates the ability of the company to cover short-term liquidity needs.
- 42.10% is the gross profit margin for HOLLYSYS AUTOMATION TECH LTD which we consider to be strong. Regardless of HOLI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, HOLI's net profit margin of 17.40% significantly outperformed against the industry.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, HOLLYSYS AUTOMATION TECH LTD's return on equity exceeds that of both the industry average and the S&P 500.
-- Written by a member of TheStreet Ratings Staff