Konami Corporation Stock Downgraded (KNM)

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) -- Konami Corporation (NYSE: KNM) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and expanding profit margins. 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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Highlights from the ratings report include:
  • KNM's debt-to-equity ratio is very low at 0.16 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.44, which illustrates the ability to avoid short-term cash problems.
  • 35.30% is the gross profit margin for KONAMI CORP which we consider to be strong. Regardless of KNM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, KNM's net profit margin of 2.62% is significantly lower than the industry average.
  • Net operating cash flow has significantly decreased to $22.83 million or 88.31% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • 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. When compared to other companies in the Software industry and the overall market, KONAMI CORP's return on equity is below that of both the industry average and the S&P 500.
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Konami Corporation develops, publishes, markets, and distributes video game software products for stationary and portable consoles, and personal computers worldwide. The company has a P/E ratio of 9.6, below the S&P 500 P/E ratio of 17.7. Konami has a market cap of $2.7 billion and is part of the technology sector and computer software & services industry. Shares are down 13.2% year to date as of the close of trading on Friday.

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

-- Written by a member of TheStreet Ratings Staff

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Konami Corporation Stock Downgraded (KNM)

Konami Corporation Stock Downgraded (KNM)

Ratings Moves: SLW, NGD, CHCI

Ratings Moves: SLW, NGD, CHCI