Mitcham Industries Inc. Stock Downgraded (MIND)

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) -- Mitcham Industries (Nasdaq: MIND) 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 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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Highlights from the ratings report include:
  • MIND's debt-to-equity ratio is very low at 0.13 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 3.68, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for MITCHAM INDUSTRIES INC is rather high; currently it is at 65.78%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 7.53% trails the industry average.
  • MIND, with its decline in revenue, underperformed when compared the industry average of 8.2%. Since the same quarter one year prior, revenues fell by 16.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Net operating cash flow has significantly decreased to $2.53 million or 68.93% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • 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. Compared to other companies in the Energy Equipment & Services industry and the overall market, MITCHAM INDUSTRIES INC's return on equity significantly trails that of both the industry average and the S&P 500.

Mitcham Industries, Inc., through its subsidiaries, engages in the leasing, sale, and service of geophysical and other equipment to the seismic industry worldwide. The company operates in two segments, Equipment Leasing and Manufacturing. Mitcham has a market cap of $185.3 million and is part of the technology sector and electronics industry. Shares are down 23% year to date as of the close of trading on Friday.

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

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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