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) -- EMCOR Group (NYSE: EME) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. 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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- Compared to its closing price of one year ago, EME's share price has jumped by 38.28%, exceeding the performance of the broader market during that same time frame. Although EME 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.
- EME's debt-to-equity ratio is very low at 0.11 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.46, which illustrates the ability to avoid short-term cash problems.
- Net operating cash flow has significantly increased by 99.15% to $42.89 million when compared to the same quarter last year. Despite an increase in cash flow, EMCOR GROUP INC's cash flow growth rate is still lower than the industry average growth rate of 115.27%.
- 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 Construction & Engineering industry. The net income has significantly decreased by 37.2% when compared to the same quarter one year ago, falling from $33.45 million to $21.01 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 Construction & Engineering industry and the overall market, EMCOR GROUP INC's return on equity is below that of both the industry average and the S&P 500.