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) -- Shenandoah Telecommunications (Nasdaq: SHEN) 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, expanding profit margins and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, unimpressive growth in net income and generally higher debt management risk.
- EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.
- The revenue growth came in higher than the industry average of 6.1%. Since the same quarter one year prior, revenues rose by 16.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The gross profit margin for SHENANDOAH TELECOMMUN CO is rather high; currently it is at 55.40%. Regardless of SHEN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SHEN's net profit margin of 1.90% is significantly lower than the same period one year prior.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Wireless Telecommunication Services industry and the overall market, SHENANDOAH TELECOMMUN CO's return on equity is below that of both the industry average and the S&P 500.
- 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 Wireless Telecommunication Services industry. The net income has significantly decreased by 54.7% when compared to the same quarter one year ago, falling from $3.00 million to $1.36 million.
- The debt-to-equity ratio of 1.11 is relatively high when compared with the industry average, suggesting a need for better debt level management.
-- Written by a member of TheStreet Ratings Staff