Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model NEW YORK ( TheStreet) -- Iridium Communications (Nasdaq: IRDM) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and revenue growth. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.
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- IRIDIUM COMMUNICATIONS INC has improved earnings per share by 43.8% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, IRIDIUM COMMUNICATIONS INC increased its bottom line by earning $0.53 versus $0.30 in the prior year. This year, the market expects an improvement in earnings ($0.88 versus $0.53).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Diversified Telecommunication Services industry. The net income increased by 51.2% when compared to the same quarter one year prior, rising from $11.68 million to $17.66 million.
- Net operating cash flow has slightly increased to $53.00 million or 2.12% when compared to the same quarter last year. Despite an increase in cash flow, IRIDIUM COMMUNICATIONS INC's cash flow growth rate is still lower than the industry average growth rate of 20.98%.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Diversified Telecommunication Services industry and the overall market, IRIDIUM COMMUNICATIONS INC's return on equity is below that of both the industry average and the S&P 500.
-- Written by a member of TheStreet Ratings Staff