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) -- KEYW (Nasdaq: KEYW) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and good cash flow from operations. 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 growth greatly exceeded the industry average of 3.4%. Since the same quarter one year prior, revenues rose by 39.6%. 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.
- Compared to its closing price of one year ago, KEYW's share price has jumped by 40.52%, exceeding the performance of the broader market during that same time frame. Although KEYW had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
- The current debt-to-equity ratio, 0.32, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.98 is somewhat weak and could be cause for future problems.
- 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. Compared to other companies in the Aerospace & Defense industry and the overall market, KEYW HOLDING CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for KEYW HOLDING CORP is currently lower than what is desirable, coming in at 32.60%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -2.90% is significantly below that of the industry average.
-- Written by a member of TheStreet Ratings Staff