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) -- Geospace Technologies (Nasdaq: GEOS) 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 notable return on equity. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall.
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- The revenue growth came in higher than the industry average of 7.8%. Since the same quarter one year prior, revenues rose by 35.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- GEOS has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, GEOS has a quick ratio of 2.41, which demonstrates the ability of the company to cover short-term liquidity needs.
- Powered by its strong earnings growth of 46.06% and other important driving factors, this stock has surged by 57.70% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
- Net operating cash flow has significantly decreased to -$40.44 million or 1387.99% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
-- Written by a member of TheStreet Ratings Staff