NEW YORK ( TheStreet Ratings) -- Every trading day TheStreet Ratings' stock model reviews the investment ratings on around 4,700 U.S. traded stocks for potential upgrades or downgrades based on the latest available financial results and trading activity.
TheStreet Ratings released rating changes on 89 U.S. common stocks for week ending March 9, 2012. 60 stocks were upgraded and 29 stocks were downgraded by our stock model.
Rating Change #10
Spectrum Brands Holdings Inc (SPB) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including generally poor debt management and weak operating cash flow.Highlights from the ratings report include:
- SPECTRUM BRANDS HOLDINGS INC reported significant earnings per share improvement 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 year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, SPECTRUM BRANDS HOLDINGS INC continued to lose money by earning -$1.47 versus -$5.56 in the prior year. This year, the market expects an improvement in earnings ($2.52 versus -$1.47).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Household Products industry. The net income increased by 166.2% when compared to the same quarter one year prior, rising from -$19.76 million to $13.07 million.
- After a year of stock price fluctuations, the net result is that SPB's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- Net operating cash flow has significantly decreased to -$89.00 million or 75.80% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Currently the debt-to-equity ratio of 1.77 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with the unfavorable debt-to-equity ratio, SPB maintains a poor quick ratio of 0.89, which illustrates the inability to avoid short-term cash problems.