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) -- Applied Materials (Nasdaq: AMAT) has been reiterated by TheStreet Ratings as a hold with a ratings score of C+ . 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 increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.
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- Although AMAT's debt-to-equity ratio of 0.27 is very low, it is currently higher than that of the industry average. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.39, which illustrates the ability to avoid short-term cash problems.
- 41.60% is the gross profit margin for APPLIED MATERIALS INC which we consider to be strong. Regardless of AMAT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, AMAT's net profit margin of -31.28% significantly underperformed when compared to the industry average.
- 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, APPLIED MATERIALS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has decreased to $411.00 million or 41.11% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
--Written by a member of TheStreet Ratings Staff.HOLIDAY SPECIAL: Let Jim Cramer show you every trade he is making in his $2.5 Million portfolio. Join now for 14-days FREE. Sign up today to get e-mail alerts before every trade