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) -- Western Union (NYSE: WU) 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, expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, weak operating cash flow and a generally disappointing performance in the stock itself.
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- The revenue growth came in higher than the industry average of 16.5%. Since the same quarter one year prior, revenues slightly increased by 1.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- 45.96% is the gross profit margin for WESTERN UNION CO which we consider to be strong. Regardless of WU's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, WU's net profit margin of 15.02% compares favorably to the industry average.
- WESTERN UNION CO reported flat earnings per share in the most recent quarter. 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, WESTERN UNION CO reported lower earnings of $1.43 versus $1.69 in the prior year. This year, the market expects an improvement in earnings ($1.45 versus $1.43).
- The change in net income from the same quarter one year ago has exceeded that of the IT Services industry average, but is less than that of the S&P 500. The net income has decreased by 4.2% when compared to the same quarter one year ago, dropping from $212.00 million to $203.00 million.
- The debt-to-equity ratio is very high at 3.60 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.