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) -- CTS Corporation (NYSE: CTS) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its increase in net income and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, disappointing return on equity and poor profit margins.
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- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Electronic Equipment, Instruments & Components industry average. The net income increased by 0.9% when compared to the same quarter one year prior, going from $5.86 million to $5.92 million.
- Despite currently having a low debt-to-equity ratio of 0.35, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that CTS's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.77 is high and demonstrates strong liquidity.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 8.0%. Since the same quarter one year prior, revenues slightly dropped by 6.0%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.
- 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. When compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, CTS CORP's return on equity is below that of both the industry average and the S&P 500.
- CTS has underperformed the S&P 500 Index, declining 16.40% from its price level of one year ago. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
-- Written by a member of TheStreet Ratings Staff