II-VI Inc. Stock Downgraded (IIVI)

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) -- II-VI (Nasdaq: IIVI) 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, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and a generally disappointing performance in the stock itself.

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Highlights from the ratings report include:
  • IIVI's revenue growth has slightly outpaced the industry average of 2.4%. Since the same quarter one year prior, revenues slightly increased by 9.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • IIVI's debt-to-equity ratio is very low at 0.19 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.20, which clearly demonstrates the ability to cover short-term cash needs.
  • 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 Electrical Equipment industry and the overall market, II-VI INC's return on equity is below that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to $7.14 million or 51.70% 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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II-VI Incorporated develops, refines, manufactures, and markets engineered materials and opto-electronic components and products worldwide. The company has a P/E ratio of 18.8, above the S&P 500 P/E ratio of 17.7. II-VI has a market cap of $923.7 million and is part of the technology sector and electronics industry. Shares are down 18.5% year to date as of the close of trading on Thursday.

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

-- Written by a member of TheStreet Ratings Staff

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