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) -- Spartan Motors (Nasdaq: SPAR) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and poor profit margins.
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- SPAR's revenue growth has slightly outpaced the industry average of 10.8%. Since the same quarter one year prior, revenues rose by 11.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- SPAR's debt-to-equity ratio is very low at 0.03 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 1.10, which illustrates the ability to avoid short-term cash problems.
- SPARTAN MOTORS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SPARTAN MOTORS INC swung to a loss, reporting -$0.07 versus $0.02 in the prior year. This year, the market expects an improvement in earnings (-$0.04 versus -$0.07).
- 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. Compared to other companies in the Auto Components industry and the overall market, SPARTAN MOTORS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for SPARTAN MOTORS INC is currently extremely low, coming in at 14.69%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.44% trails that of the industry average.