Advanced Energy Industries Inc. Stock Downgraded (AEIS)

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) -- Advanced Energy Industries (Nasdaq: AEIS) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.

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Highlights from the ratings report include:
  • AEIS has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 3.03, which clearly demonstrates the ability to cover short-term cash needs.
  • AEIS, with its decline in revenue, slightly underperformed the industry average of 4.2%. Since the same quarter one year prior, revenues slightly dropped by 8.5%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry average. The net income has decreased by 13.0% when compared to the same quarter one year ago, dropping from $6.59 million to $5.74 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, ADVANCED ENERGY INDS INC's return on equity significantly trails that of both the industry average and the S&P 500.
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Advanced Energy Industries, Inc., together with its subsidiaries, designs, manufactures, sells, and supports power conversion products that transform power into various usable forms. The company has a P/E ratio of 36.3, above the S&P 500 P/E ratio of 17.7. Advanced Energy has a market cap of $453.7 million and is part of the technology sector and electronics industry. Shares are up 11.6% year to date as of the close of trading on Monday.

You can view the full Advanced Energy Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

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