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) -- Diebold Incorporated (NYSE: DBD) has been downgraded by TheStreet Ratings from buy to hold. Among the primary strengths of the company is its solid financial position based on a variety of debt and liquidity measures that we have evaluated. At the same time, however, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

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Highlights from the ratings report include:
  • DBD, with its decline in revenue, underperformed when compared the industry average of 18.1%. Since the same quarter one year prior, revenues slightly dropped by 1.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • DBD's debt-to-equity ratio of 0.80 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 1.33 is sturdy.
  • DIEBOLD INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, DIEBOLD INC reported lower earnings of $1.27 versus $2.26 in the prior year. This year, the market expects an improvement in earnings ($1.95 versus $1.27).
  • The gross profit margin for DIEBOLD INC is currently lower than what is desirable, coming in at 25.20%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -1.26% is significantly below that of the industry average.
  • Net operating cash flow has decreased to $164.26 million or 39.17% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
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Diebold, Incorporated provides integrated self-service delivery and security systems and services primarily to the financial, commercial, government, and retail markets worldwide. The company has a P/E ratio of 11.4, below the S&P 500 P/E ratio of 17.7. Diebold has a market cap of $1.9 billion and is part of the consumer goods sector and consumer durables industry. Shares are down 1.7% year to date as of the close of trading on Wednesday.

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

-- Written by a member of TheStreet Ratings Staff

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