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) -- NTT DoCoMo (NYSE: DCM) 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, reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.
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- DCM's debt-to-equity ratio is very low at 0.05 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, DCM has a quick ratio of 1.68, which demonstrates the ability of the company to cover short-term liquidity needs.
- The gross profit margin for NTT DOCOMO INC is rather high; currently it is at 58.70%. Regardless of DCM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, DCM's net profit margin of 5.32% 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 underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Wireless Telecommunication Services industry average. The net income has decreased by 9.2% when compared to the same quarter one year ago, dropping from $503.02 million to $456.65 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. When compared to other companies in the Wireless Telecommunication Services industry and the overall market, NTT DOCOMO INC's return on equity is below that of both the industry average and the S&P 500.
-- Written by a member of TheStreet Ratings Staff