Rating Change #9
Ashland Inc (ASH) has been downgraded by TheStreet Ratings from buy to hold. Among the primary strengths of the company is its solid financial position based on a variety of debt and liquidity measures that we have evaluated. At the same time, however, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.
Highlights from the ratings report include:
- The revenue fell significantly faster than the industry average of 14.2%. Since the same quarter one year prior, revenues fell by 22.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- ASH's debt-to-equity ratio of 0.93 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.28 is sturdy.
- ASHLAND INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, ASHLAND INC swung to a loss, reporting -$0.66 versus $3.26 in the prior year. This year, the market expects an improvement in earnings ($5.28 versus -$0.66).
- The gross profit margin for ASHLAND INC is rather low; currently it is at 21.60%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -14.20% is significantly below that of the industry average.
- Net operating cash flow has decreased to $149.00 million or 28.70% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
Ashland Inc. operates as a specialty chemicals company in the United States and internationally. Its Ashland Aqualon Functional Ingredients segment produces cellulose ethers; and specialty additives and functional ingredients. The company has a P/E ratio of 12.6, above the average chemicals industry P/E ratio of 7.1 and below the S&P 500 P/E ratio of 17.7. Ashland has a market cap of $4.2 billion and is part of the basic materials sector and chemicals industry. Shares are up 5.6% year to date as of the close of trading on Wednesday.You can view the full Ashland Ratings Report or get investment ideas from our investment research center.