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) -- Air Transport Services Group (Nasdaq: ATSG) has been downgraded by TheStreet Ratings from buy to hold. Among the primary strengths of the company is its attractive valuation levels, considering its current price compared to earnings, book value and other measures. At the same time, however, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity.
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- ATSG, with its decline in revenue, underperformed when compared the industry average of 6.2%. Since the same quarter one year prior, revenues fell by 20.5%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- AIR TRANSPORT SERVICES GROUP's earnings per share declined by 10.5% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, AIR TRANSPORT SERVICES GROUP reported lower earnings of $0.36 versus $0.63 in the prior year. This year, the market expects an improvement in earnings ($0.65 versus $0.36).
- The debt-to-equity ratio of 1.25 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, ATSG maintains a poor quick ratio of 0.91, which illustrates the inability to avoid short-term cash problems.
- 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. In comparison to the other companies in the Air Freight & Logistics industry and the overall market, AIR TRANSPORT SERVICES GROUP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
-- Written by a member of TheStreet Ratings Staff