Rating Change #6
Tenaris (TS) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust 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 find that the stock has had a generally disappointing performance in the past year.
Highlights from the ratings report include:
- TS's revenue growth trails the industry average of 48.3%. Since the same quarter one year prior, revenues rose by 21.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- TS's debt-to-equity ratio is very low at 0.12 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.17, which illustrates the ability to avoid short-term cash problems.
- 40.00% is the gross profit margin for TENARIS SA which we consider to be strong. Regardless of TS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 12.00% trails the industry average.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Energy Equipment & Services industry and the overall market, TENARIS SA's return on equity is below that of both the industry average and the S&P 500.
- TS has underperformed the S&P 500 Index, declining 6.56% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
Tenaris S.A., through its subsidiaries, engages in the manufacture and sale of steel pipe products. The company has a P/E ratio of 16.7, above the average metals & mining industry P/E ratio of 15.2 and below the S&P 500 P/E ratio of 17.7. Tenaris has a market cap of $18.7 billion and is part of the basic materials sector and metals & mining industry. Shares are down 34.4% year to date as of the close of trading on Tuesday.You can view the full Tenaris Ratings Report or get investment ideas from our investment research center.
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