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) -- Applied Materials (Nasdaq: AMAT) has been reiterated by TheStreet Ratings as a hold with a ratings score of C+ . 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 expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share.
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- Although AMAT's debt-to-equity ratio of 0.23 is very low, it is currently higher than that of the industry average. To add to this, AMAT has a quick ratio of 1.54, which demonstrates the ability of the company to cover short-term liquidity needs.
- Net operating cash flow has slightly increased to $656.00 million or 9.51% when compared to the same quarter last year. Despite an increase in cash flow, APPLIED MATERIALS INC's cash flow growth rate is still lower than the industry average growth rate of 23.85%.
- 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 Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 54.2% when compared to the same quarter one year ago, falling from $476.00 million to $218.00 million.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. When compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, APPLIED MATERIALS 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.FREE from Real Money's Jim Cramer: Winners and Losers Election 2012 - Steps to take NOW so you can profit no matter who is in charge! Free Download Now