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) -- Helix Energy Solutions Group (NYSE: HLX) 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 and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.
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- The revenue fell significantly faster than the industry average of 6.4%. Since the same quarter one year prior, revenues fell by 49.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- HLX's debt-to-equity ratio of 0.72 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.
- Compared to its closing price of one year ago, HLX's share price has jumped by 27.48%, exceeding the performance of the broader market during that same time frame. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Energy Equipment & Services industry and the overall market, HELIX ENERGY SOLUTIONS GROUP's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for HELIX ENERGY SOLUTIONS GROUP is rather low; currently it is at 24.30%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -85.05% is significantly below that of the industry average.
-- Written by a member of TheStreet Ratings Staff