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) -- RELM Wireless Corporation (AMEX: RWC) 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 and disappointing return on equity.
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- RWC 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 3.52, which clearly demonstrates the ability to cover short-term cash needs.
- Net operating cash flow has increased to $1.43 million or 36.54% when compared to the same quarter last year. Despite an increase in cash flow of 36.54%, RELM WIRELESS CORP is still growing at a significantly lower rate than the industry average of 89.19%.
- 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 Communications Equipment industry. The net income has significantly decreased by 84.2% when compared to the same quarter one year ago, falling from $1.25 million to $0.20 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 Communications Equipment industry and the overall market, RELM WIRELESS CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.