Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link. NEW YORK ( TheStreet) -- MKS Instruments (Nasdaq: MKSI) 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 and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and deteriorating net income.
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- MKSI 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. Along with this, the company maintains a quick ratio of 8.52, which clearly demonstrates the ability to cover short-term cash needs.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 12.6%. Since the same quarter one year prior, revenues fell by 11.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- 39.01% is the gross profit margin for MKS INSTRUMENTS INC which we consider to be strong. Regardless of MKSI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MKSI's net profit margin of 4.66% is significantly lower than the industry average.
- MKS INSTRUMENTS INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, MKS INSTRUMENTS INC reported lower earnings of $0.91 versus $2.46 in the prior year. For the next year, the market is expecting a contraction of 17.6% in earnings ($0.75 versus $0.91).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 60.6% when compared to the same quarter one year ago, falling from $18.57 million to $7.32 million.