Nam Tai Electronics Inc. Stock Downgraded (NTE)

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) -- Nam Tai Electronics (NYSE: NTE) 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, attractive valuation levels and notable return on equity. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, poor profit margins and weak operating cash flow.

  • EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.

Highlights from the ratings report include:
  • NTE 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 2.63, which clearly demonstrates the ability to cover short-term cash needs.
  • NAM TAI ELECTRONIC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past two years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, NAM TAI ELECTRONIC increased its bottom line by earning $0.91 versus $0.83 in the prior year.
  • The gross profit margin for NAM TAI ELECTRONIC is currently extremely low, coming in at 10.10%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 3.93% trails that of the industry average.
  • Net operating cash flow has decreased to $31.76 million or 30.47% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

Nam Tai Electronics, Inc. provides electronics manufacturing and design services to the original equipment manufacturers of telecommunication and consumer electronic products. The company has a P/E ratio of 3.3, below the S&P 500 P/E ratio of 17.7. Nam Tai has a market cap of $265.7 million and is part of the technology sector and electronics industry. Shares are down 14.7% year to date as of the close of trading on Thursday.

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

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.
Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

If you liked this article you might like

4 Under-$10 Stocks to Trade for Breakouts

Nam Tai Electronics (NTE) Falls After Revenue Declines 25%

These 3 China-Based U.S. Stocks Tumbled on Tuesday

5 Stocks Going Ex-Dividend Tomorrow: NTE, PPS, ESS, AVB, DOW