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) -- EchoStar (Nasdaq: SATS) 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, solid stock price performance and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and poor profit margins.
- ACTIVE STOCK TRADERS: Get full access to Jim Cramer's thoughts for less than $3/week - sometimes before he says them on TV! Start with a 14-Day Free Trial.
- The revenue growth came in higher than the industry average of 14.0%. Since the same quarter one year prior, revenues rose by 38.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The strong earnings growth this company has enjoyed -- up -- has apparently played a role in driving up its share price by a solid 27.90%. In addition, the rise in the general market has likely contributed to this stock's strong performance during this past year.Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- ECHOSTAR CORP reported significant earnings per share improvement 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, ECHOSTAR CORP reported lower earnings of $0.03 versus $2.39 in the prior year. This year, the market expects an improvement in earnings ($2.14 versus $0.03).
- The gross profit margin for ECHOSTAR CORP is currently lower than what is desirable, coming in at 33.40%. Regardless of SATS's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, SATS's net profit margin of 4.40% is significantly lower than the same period one year prior.
- 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. Compared to other companies in the Communications Equipment industry and the overall market, ECHOSTAR CORP's return on equity significantly trails that of both the industry average and the S&P 500.
-- Written by a member of TheStreet Ratings Staff