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NEW YORK (TheStreet) -- Ultra Clean Holdings (UCTT) has been downgraded by TheStreet Ratings from Buy to Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate ULTRA CLEAN HOLDINGS INC (UCTT) 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 revenue growth, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. 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:
- Despite its growing revenue, the company underperformed as compared with the industry average of 18.7%. Since the same quarter one year prior, revenues rose by 11.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- UCTT's debt-to-equity ratio is very low at 0.26 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, UCTT has a quick ratio of 1.50, which demonstrates the ability of the company to cover short-term liquidity needs.
- ULTRA CLEAN HOLDINGS INC 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. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ULTRA CLEAN HOLDINGS INC increased its bottom line by earning $0.36 versus $0.24 in the prior year. This year, the market expects an improvement in earnings ($0.79 versus $0.36).
- The gross profit margin for ULTRA CLEAN HOLDINGS INC is rather low; currently it is at 18.09%. Regardless of UCTT's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, UCTT's net profit margin of -4.39% significantly underperformed when compared to the industry average.
- 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 Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 357.0% when compared to the same quarter one year ago, falling from $2.05 million to -$5.26 million.
- You can view the full analysis from the report here: UCTT Ratings Report