NEW YORK ( TheStreet) -- ABM Industries (NYSE: ABM) 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, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, disappointing return on equity and poor profit margins.
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- The current debt-to-equity ratio, 0.33, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.30, which illustrates the ability to avoid short-term cash problems.
- Net operating cash flow has increased to $43.53 million or 36.54% when compared to the same quarter last year. Despite an increase in cash flow, ABM INDUSTRIES INC's cash flow growth rate is still lower than the industry average growth rate of 55.07%.
- 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 Commercial Services & Supplies industry. The net income has decreased by 17.5% when compared to the same quarter one year ago, dropping from $14.19 million to $11.71 million.
- 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. In comparison to the other companies in the Commercial Services & Supplies industry and the overall market, ABM INDUSTRIES INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
-- Written by a member of TheStreet Ratings Staff