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) -- ORBCOMM (Nasdaq: ORBC) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, 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 feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.
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- The revenue growth came in higher than the industry average of 1.0%. Since the same quarter one year prior, revenues rose by 18.7%. 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.
- ORBC's debt-to-equity ratio is very low at 0.24 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 5.32, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for ORBCOMM INC is rather high; currently it is at 56.08%. Regardless of ORBC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ORBC's net profit margin of 4.25% is significantly lower than the industry average.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Diversified Telecommunication Services industry and the overall market, ORBCOMM INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has decreased to $3.30 million or 34.68% 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.