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Omnova Solutions Inc. Stock Upgraded (OMN)

Editor's Note: 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

NEW YORK (TheStreet) -- Omnova Solutions (NYSE:OMN) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income and attractive valuation levels. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:

  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Chemicals industry average. The net income increased by 12.9% when compared to the same quarter one year prior, going from $6.20 million to $7.00 million.
  • Compared to its closing price of one year ago, OMN's share price has jumped by 114.64%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, OMN should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 1.8%. Since the same quarter one year prior, revenues slightly dropped by 1.7%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • OMNOVA SOLUTIONS INC's earnings per share declined by 6.3% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, OMNOVA SOLUTIONS INC reported lower earnings of $0.40 versus $2.38 in the prior year. This year, the market expects an improvement in earnings ($0.74 versus $0.40).

OMNOVA Solutions Inc. provides emulsion polymers, specialty chemicals, and decorative and functional surfaces for commercial, industrial, and residential end uses primarily in North America, Europe, and Asia. The company operates in two segments, Performance Chemicals and Decorative Products. The company has a P/E ratio of 15.3, below the average chemicals industry P/E ratio of 38.3 and below the S&P 500 P/E ratio of 17.7. Omnova has a market cap of $392.4 million and is part of the basic materials sector and chemicals industry. Shares are up 82.6% year to date as of the close of trading on Tuesday.

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

-- Written by a member of TheStreet Ratings Staff

Editor's Note: 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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