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"We rate ELTEK LTD (ELTK) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its notable return on equity, reasonable valuation levels and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and a generally disappointing performance in the stock itself."
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Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, ELTEK LTD's return on equity exceeds that of both the industry average and the S&P 500.
- The current debt-to-equity ratio, 0.33, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that ELTK's debt-to-equity ratio is low, the quick ratio, which is currently 0.62, displays a potential problem in covering short-term cash needs.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Electronic Equipment, Instruments & Components industry. The net income has significantly decreased by 190.9% when compared to the same quarter one year ago, falling from $0.59 million to -$0.53 million.
- The gross profit margin for ELTEK LTD is rather low; currently it is at 17.41%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -4.53% is significantly below that of the industry average.
- You can view the full analysis from the report here: ELTK Ratings Report