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.
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- 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.