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) -- Libbey (AMEX: LBY) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its notable return on equity, good cash flow from operations and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, generally higher debt management risk and poor profit margins.
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- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Household Durables industry and the overall market, LIBBEY INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- Net operating cash flow has increased to $34.77 million or 24.66% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 5.10%.
- The revenue fell significantly faster than the industry average of 28.1%. Since the same quarter one year prior, revenues slightly dropped by 2.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The debt-to-equity ratio is very high at 6.14 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, LBY maintains a poor quick ratio of 0.71, which illustrates the inability to avoid short-term cash problems.
- The gross profit margin for LIBBEY INC is currently lower than what is desirable, coming in at 26.51%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 2.31% trails that of the industry average.