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) -- Abaxis (Nasdaq: ABAX) 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, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.
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- ABAX's debt-to-equity ratio is very low at 0.00 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 7.26, which clearly demonstrates the ability to cover short-term cash needs.
- Net operating cash flow has slightly increased to $12.98 million or 1.67% when compared to the same quarter last year. In addition, ABAXIS INC has also modestly surpassed the industry average cash flow growth rate of 0.21%.
- The gross profit margin for ABAXIS INC is rather high; currently it is at 52.06%. Regardless of ABAX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 7.89% trails the industry average.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. When compared to other companies in the Health Care Equipment & Supplies industry and the overall market, ABAXIS INC's return on equity is below that of both the industry average and the S&P 500.