TSC Ratings' Updates: Ctrip.com

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

Revenue is up 18.3% since the same quarter last year, outperforming the industry average of 2.5% growth and boosting EPS. Greif has improved earnings per share by 33% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years that we feel should continue, suggesting improving business performance. During the past fiscal year, Greif increased its bottom line by earning $3.30 vs. $3.04 in the prior year. This year, the market expects an improvement in earnings to $4.18. Net operating cash flow has decreased to $69.84 million or 16.77% when compared to the same quarter last year.

The debt-to-equity ratio is somewhat low, currently at 0.72, and is less than that of the industry average, implying a relatively successful effort in the management of debt levels. Greif's quick ratio of 0.72 is somewhat weak and could be cause for future problems. Net operating cash flow has decreased to $69.8 million, or 16.8% when compared with the same quarter last year. Compared with the industry's average cash generation rate, the firm's growth is significantly lower.