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) -- St Jude Medical (NYSE: STJ) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and disappointing return on equity.
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- Despite currently having a low debt-to-equity ratio of 0.53, 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 STJ's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.58 is high and demonstrates strong liquidity.
- The gross profit margin for ST JUDE MEDICAL INC is currently very high, coming in at 79.10%. Regardless of STJ's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 13.27% trails the industry average.
- Net operating cash flow has declined marginally to $350.00 million or 2.05% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, ST JUDE MEDICAL INC has marginally lower results.
- 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 greatly underperformed compared to the Health Care Equipment & Supplies industry average. The net income has decreased by 22.3% when compared to the same quarter one year ago, dropping from $226.47 million to $176.00 million.
-- Written by a member of TheStreet Ratings Staff