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) -- VOXX International (Nasdaq: VOXX) has been downgraded by TheStreet Ratings from buy to hold. Among the primary strengths of the company is its solid financial position based on a variety of debt and liquidity measures that we have evaluated. At the same time, however, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.
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- Although VOXX's debt-to-equity ratio of 0.27 is very low, it is currently higher than that of the industry average. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.15, which illustrates the ability to avoid short-term cash problems.
- VOXX, with its decline in revenue, underperformed when compared the industry average of 12.3%. Since the same quarter one year prior, revenues slightly dropped by 9.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- VOXX INTERNATIONAL CORP 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, VOXX INTERNATIONAL CORP swung to a loss, reporting -$1.09 versus $0.96 in the prior year. This year, the market expects an improvement in earnings ($1.02 versus -$1.09).
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Distributors industry and the overall market, VOXX INTERNATIONAL CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for VOXX INTERNATIONAL CORP is currently lower than what is desirable, coming in at 30.47%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -26.20% is significantly below that of the industry average.