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) -- Mistras Group (NYSE: MG) 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 and largely solid financial position with reasonable debt levels by most measures. 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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- Despite its growing revenue, the company underperformed as compared with the industry average of 19.6%. Since the same quarter one year prior, revenues rose by 13.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The current debt-to-equity ratio, 0.44, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, MG has a quick ratio of 1.81, which demonstrates the ability of the company to cover short-term liquidity needs.
- MISTRAS GROUP INC 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. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, MISTRAS GROUP INC reported lower earnings of $0.40 versus $0.75 in the prior year. This year, the market expects an improvement in earnings ($0.90 versus $0.40).
- 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. In comparison to the other companies in the Professional Services industry and the overall market, MISTRAS GROUP INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- The gross profit margin for MISTRAS GROUP INC is currently lower than what is desirable, coming in at 28.89%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.79% trails that of the industry average.