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NEW YORK ( TheStreet) -- Consolidated Water (Nasdaq: CWCO) 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, expanding profit margins and increase in stock price during the past year. 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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Highlights from the ratings report include:
  • CWCO 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 3.32, which clearly demonstrates the ability to cover short-term cash needs.
  • 36.52% is the gross profit margin for CONSOLIDATED WATER CO INC which we consider to be strong. Regardless of CWCO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CWCO's net profit margin of 4.00% 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 Water Utilities industry and the overall market on the basis of return on equity, CONSOLIDATED WATER CO INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • Net operating cash flow has significantly decreased to -$2.13 million or 166.89% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

Consolidated Water Co. Ltd., together with its subsidiaries, develops and operates seawater desalination plants and water distribution systems. It operates in three segments: Retail, Bulk, and Services. Consolidated Water has a market cap of $164 million and is part of the utilities sector and utilities industry. Shares are down 24.3% year to date as of the close of trading on Thursday.

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

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