TSC Ratings' Updates: Quanta

Net operating cash flow has significantly decreased to -$40.12 million, or 449.73% when compared with the same quarter last year. In addition, compared with the industry average, the firm's growth rate is much lower. Enstar's debt-to-equity ratio of 0.68 is somewhat low overall, but it is high when compared to the industry average. On the basis of ROE, Enstar underperforms both the insurance industry and the S&P 500.

Shares have plunged 42.1% on the year, dragged down in part by the decline in the S&P 500. Don't assume, however, that Enstar can now be tagged as cheap and attractive. Based on its current price in relation to its earnings, it is still more expensive than most of the other companies in its industry.

We've downgraded Lincoln Electric (LECO Quote), which engages in the manufacture and resale of welding and cutting products worldwide, from buy to hold. Strengths include its impressive record of earnings per share growth, compelling growth in net income and revenue growth. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, weak operating cash flow and poor profit margins.

Lincoln Electric has improved earnings per share by 39.1% in the most recent quarter compared with the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years, which we feel should continue. During the past fiscal year, it increased its bottom line by earning $4.67 vs. $4.07 in the prior year, and this year, the market expects further improvement in earnings to $5.59. Net income increased by 38.5% over the same quarter a year ago, to $69.21 million, exceeding the average net income growth of the S&P 500 and the machinery industry. The return on equity has improved slightly when compared with the same quarter one year prior, which can be construed as a modest strength in the organization. On the basis of ROE, Lincoln Electric has underperformed the industry average but outperformed the S&P 500.