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) -- Affymetrix (Nasdaq: AFFX) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.
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- The revenue growth came in higher than the industry average of 6.8%. Since the same quarter one year prior, revenues rose by 29.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- AFFYMETRIX INC has improved earnings per share by 19.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, AFFYMETRIX INC continued to lose money by earning -$0.15 versus -$0.40 in the prior year. This year, the market expects an improvement in earnings ($0.04 versus -$0.15).
- AFFX's debt-to-equity ratio of 0.66 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.19 is sturdy.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Life Sciences Tools & Services industry and the overall market, AFFYMETRIX INC's return on equity significantly trails that of both the industry average and the S&P 500.
- AFFX has underperformed the S&P 500 Index, declining 20.98% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
-- Written by a member of TheStreet Ratings Staff