Rating Change #7
Nucor Corp (NUE) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, poor profit margins and feeble growth in the company's earnings per share.
Highlights from the ratings report include:
- NUE's revenue growth has slightly outpaced the industry average of 2.0%. Since the same quarter one year prior, revenues slightly increased by 4.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has significantly increased by 337.20% to $207.65 million when compared to the same quarter last year. In addition, NUCOR CORP has also vastly surpassed the industry average cash flow growth rate of -46.14%.
- Despite currently having a low debt-to-equity ratio of 0.57, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that NUE's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.64 is high and demonstrates strong liquidity.
Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, NUE has underperformed the S&P 500 Index, declining 14.53% from its price level of one year ago. 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 twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
- The gross profit margin for NUCOR CORP is currently extremely low, coming in at 10.40%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 2.90% significantly trails the industry average.