Flow International Corporation Stock Downgraded (FLOW)

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) -- Flow International Corporation (Nasdaq: FLOW) 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 good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share.

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Highlights from the ratings report include:
  • FLOW'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 1.02, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has increased to $4.81 million or 40.56% when compared to the same quarter last year. Despite an increase in cash flow, FLOW INTL CORP's cash flow growth rate is still lower than the industry average growth rate of 65.90%.
  • 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 Machinery industry. The net income has significantly decreased by 172.1% when compared to the same quarter one year ago, falling from $2.64 million to -$1.91 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. In comparison to the other companies in the Machinery industry and the overall market, FLOW INTL CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.

Flow International Corporation, a technology-based manufacturing company, provides water jet cutting and surface preparing solutions. The company operates in two segments, Standard and Advanced. Flow International has a market cap of $168.3 million and is part of the industrial goods sector and industrial industry. Shares are down 1.4% year to date as of the close of trading on Wednesday.

You can view the full Flow International Ratings Report or get investment ideas from our investment research center.

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