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) -- Transact Technologies (Nasdaq: TACT) 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 and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.
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- TACT 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. To add to this, TACT has a quick ratio of 2.30, which demonstrates the ability of the company to cover short-term liquidity needs.
- TRANSACT TECHNOLOGIES INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, TRANSACT TECHNOLOGIES INC increased its bottom line by earning $0.49 versus $0.41 in the prior year. This year, the market expects an improvement in earnings ($0.59 versus $0.49).
- The revenue fell significantly faster than the industry average of 23.3%. Since the same quarter one year prior, revenues slightly dropped by 9.5%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- The share price of TRANSACT TECHNOLOGIES INC has not done very well: it is down 12.55% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. 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.
- 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 Computers & Peripherals industry. The net income has significantly decreased by 64.8% when compared to the same quarter one year ago, falling from $1.44 million to $0.51 million.
-- Written by a member of TheStreet Ratings Staff