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Globe Specialty Metals Inc. Stock Upgraded (GSM)

NEW YORK ( TheStreet) -- Globe Specialty Metals (Nasdaq: GSM) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 2.2%. Since the same quarter one year prior, revenues slightly increased by 0.4%. 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.
  • GSM's debt-to-equity ratio is very low at 0.20 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, GSM has a quick ratio of 2.03, which demonstrates the ability of the company to cover short-term liquidity needs.
  • 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. Compared to other companies in the Metals & Mining industry and the overall market on the basis of return on equity, GLOBE SPECIALTY METALS INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • GLOBE SPECIALTY METALS INC's earnings per share declined by 50.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, GLOBE SPECIALTY METALS INC increased its bottom line by earning $0.68 versus $0.47 in the prior year. This year, the market expects an improvement in earnings ($0.81 versus $0.68).
  • Net operating cash flow has declined marginally to $23.03 million or 3.50% when compared to the same quarter last year. Despite a decrease in cash flow GLOBE SPECIALTY METALS INC is still fairing well by exceeding its industry average cash flow growth rate of -23.92%.

Globe Specialty Metals, Inc., together with its subsidiaries, produces and sells silicon metal and silicon-based alloys in North America, Europe, South America, and Asia. The company primarily offers silicon metal that is used as a raw material for silicone compounds, aluminum, and polysilicon. The company has a P/E ratio of 16, equal to the average metals & mining industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Globe Specialty has a market cap of $962.9 million and is part of the basic materials sector and metals & mining industry. Shares are down 5.1% year to date as of the close of trading on Tuesday.

You can view the full Globe Specialty Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

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