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) -- Universal Display (Nasdaq: OLED) 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 notable return on equity. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.
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- OLED's very impressive revenue growth greatly exceeded the industry average of 1.8%. Since the same quarter one year prior, revenues leaped by 75.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- OLED 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 12.41, which clearly demonstrates the ability to cover short-term cash needs.
- UNIVERSAL DISPLAY CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, UNIVERSAL DISPLAY CORP increased its bottom line by earning $1.59 versus $0.20 in the prior year. For the next year, the market is expecting a contraction of 34.0% in earnings ($1.05 versus $1.59).
- OLED has underperformed the S&P 500 Index, declining 13.45% from its price level of one year ago. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.