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Matrix Service Company Stock Downgraded (MTRX)

NEW YORK ( TheStreet) -- Matrix Service Company (Nasdaq: MTRX) 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 growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and weak operating cash flow.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 12.8%. Since the same quarter one year prior, revenues rose by 34.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • MTRX's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, MTRX has a quick ratio of 1.60, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The gross profit margin for MATRIX SERVICE CO is currently extremely low, coming in at 12.30%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 2.60% trails that of the industry average.
  • Net operating cash flow has significantly decreased to $6.30 million or 72.19% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

Matrix Service Company provides construction, and repair and maintenance services primarily to the energy and energy related industries in the United States and internationally. The company operates in two segments, Construction Services, and Repair and Maintenance Services. The company has a P/E ratio of 13.3, above the average materials & construction industry P/E ratio of 13.2 and below the S&P 500 P/E ratio of 17.7. Matrix Service has a market cap of $270.7 million and is part of the industrial goods sector and materials & construction industry. Shares are up 12.1% year to date as of the close of trading on Thursday.

You can view the full Matrix Service 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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