NEW YORK ( TheStreet) -- CVD Equipment Corporation (Nasdaq: CVV) 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 increase in net income. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and weak operating cash flow.
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- CVV's revenue growth has slightly outpaced the industry average of 14.5%. Since the same quarter one year prior, revenues rose by 15.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Although CVV's debt-to-equity ratio of 0.29 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 3.98, which clearly demonstrates the ability to cover short-term cash needs.
- CVD EQUIPMENT CORP's earnings per share declined by 14.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CVD EQUIPMENT CORP increased its bottom line by earning $0.66 versus $0.11 in the prior year. This year, the market expects an improvement in earnings ($0.85 versus $0.66).
- Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, CVV has underperformed the S&P 500 Index, declining 24.09% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
- Net operating cash flow has significantly decreased to $2.27 million or 52.49% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
-- Written by a member of TheStreet Ratings Staff