TSC Ratings' Updates: Oshkosh

The following ratings changes were generated on Friday, Jan. 9.

We've upgraded Harmony Gold Mining(HMY), which Limited conducts underground and surface gold mining, from sell to hold. Strengths include its compelling growth in net income, revenue growth and good cash flow from operations. However, we also find weaknesses including poor profit margins and a decline in the stock price during the past year.

Net income increased by 158.8% compared with the same quarter a year ago, outperforming the S&P 500 and the metals and mining industry. Revenue increased by 3.7% but trails the industry average of 72.5% growth. Earnings per share rose significantly compared with the year-ago quarter, and though Harmony has reported somewhat volatile earnings recently, we feel it is poised for EPS growth in the coming year. During the past fiscal year, it reported -26 cents vs. 28 cents in the prior year, but this year the market expects improvement to 46 cents.

Harmony's gross profit margin is lower than desirable at 29%, though it has increased significantly from the same period last year. Its net profit margin of 15% is significantly lower than the same period one year prior. Shares are down 13.4%, reflecting, in part, the market's overall decline. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last 12 months, and it could be down again in the next 12. Naturally, a bull or bear market could sway the movement of this stock.