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) -- KVH Industries (Nasdaq: KVHI) 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, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.
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- The revenue growth greatly exceeded the industry average of 15.7%. Since the same quarter one year prior, revenues rose by 49.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- KVHI's debt-to-equity ratio is very low at 0.14 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 3.50, which clearly demonstrates the ability to cover short-term cash needs.
- Powered by its strong earnings growth of 244.44% and other important driving factors, this stock has surged by 43.64% over the past year, outperforming the rise in the S&P 500 Index during the same period. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
- 39.50% is the gross profit margin for KVH INDUSTRIES INC which we consider to be strong. Regardless of KVHI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, KVHI's net profit margin of 4.91% is significantly lower than the industry average.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. In comparison to the other companies in the Communications Equipment industry and the overall market, KVH INDUSTRIES 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