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) -- Merit Medical Systems (Nasdaq: MMSI) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and relatively poor performance when compared with the S&P 500 during the past year.
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- MMSI's revenue growth has slightly outpaced the industry average of 8.5%. Since the same quarter one year prior, revenues rose by 12.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has significantly increased by 178.42% to $14.78 million when compared to the same quarter last year. In addition, MERIT MEDICAL SYSTEMS INC has also vastly surpassed the industry average cash flow growth rate of 8.25%.
- The gross profit margin for MERIT MEDICAL SYSTEMS INC is rather high; currently it is at 51.00%. Regardless of MMSI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MMSI's net profit margin of 0.62% is significantly lower than the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Health Care Equipment & Supplies industry. The net income has significantly decreased by 87.1% when compared to the same quarter one year ago, falling from $4.97 million to $0.64 million.
- 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. In comparison to the other companies in the Health Care Equipment & Supplies industry and the overall market, MERIT MEDICAL SYSTEMS INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
-- Written by a member of TheStreet Ratings Staff