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) -- Carbo Ceramics (NYSE:CRR) 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 notable return on equity. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.
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- CRR's revenue growth has slightly outpaced the industry average of 13.3%. Since the same quarter one year prior, revenues rose by 18.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- CRR has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 3.06, which clearly demonstrates the ability to cover short-term cash needs.
- 42.50% is the gross profit margin for CARBO CERAMICS INC which we consider to be strong. Regardless of CRR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CRR's net profit margin of 18.00% compares favorably to the industry average.
- CARBO CERAMICS INC has improved earnings per share by 7.0% 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 two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, CARBO CERAMICS INC increased its bottom line by earning $5.61 versus $3.40 in the prior year. For the next year, the market is expecting a contraction of 20.5% in earnings ($4.46 versus $5.61).
- CRR's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 42.93%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
-- Written by a member of TheStreet Ratings Staff
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