Iteris Inc. Stock Downgraded (ITI)

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) -- Iteris (AMEX: ITI) 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, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

  • 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.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Electronic Equipment, Instruments & Components industry. The net income increased by 46.9% when compared to the same quarter one year prior, rising from $0.75 million to $1.10 million.
  • ITI 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. To add to this, ITI has a quick ratio of 2.44, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Compared to its closing price of one year ago, ITI's share price has jumped by 33.33%, exceeding the performance of the broader market during that same time frame. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
  • ITI, with its decline in revenue, slightly underperformed the industry average of 2.8%. Since the same quarter one year prior, revenues slightly dropped by 6.0%. The declining revenue appears to have seeped down to the company's bottom line, decreasing 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. Compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market on the basis of return on equity, ITERIS INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
.

Iteris, Inc. provides intelligent transportation systems (ITS) solutions to the traffic management market in North America, Europe, Asia, and South America. It operates in two segments, Roadway Sensors and Transportation Systems. The company has a P/E ratio of 20.1, above the S&P 500 P/E ratio of 17.7. Iteris has a market cap of $60.8 million and is part of the technology sector and telecommunications industry. Shares are up 6.5% year to date as of the close of trading on Friday.

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

-- Written by a member of TheStreet Ratings Staff

It's Official: Action Alerts PLUS beats the S&P 500 with Dividends Reinvested! Cramer and Link were up 16.72% in 2012. Were you? See what they are trading for 14-days FREE.
null

If you liked this article you might like

Iteris (ITI) Stock Soaring on Preliminary Q1 Revenue

Insider Trading Alert - TREE, IVR And ITI Traded By Insiders

Insider Trading Alert - TREE, IVR And ITI Traded By Insiders

3 Stocks Advancing The Telecommunications Industry

3 Stocks Driving The Telecommunications Industry Higher