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Nordion Inc. Stock Downgraded (NDZ)

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) -- Nordion (NYSE: NDZ) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, increase in net income and revenue growth. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and disappointing return on equity.

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Highlights from the ratings report include:

  • NORDION INC reported significant earnings per share improvement 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. During the past fiscal year, NORDION INC turned its bottom line around by earning $0.66 versus -$0.73 in the prior year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Life Sciences Tools & Services industry. The net income increased by 398.5% when compared to the same quarter one year prior, rising from -$4.12 million to $12.30 million.
  • NDZ'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 25.63%, 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. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. When compared to other companies in the Life Sciences Tools & Services industry and the overall market, NORDION INC's return on equity is below that of both the industry average and the S&P 500.
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Nordion Inc., a health science company, provides various products and services used for the prevention, diagnosis, and treatment of diseases worldwide. The company has a P/E ratio of 18.8, below the average health services industry P/E ratio of 73 and above the S&P 500 P/E ratio of 17.7. Nordion has a market cap of $407.1 million and is part of the health care sector and health services industry. Shares are down 21.2% year to date as of the close of trading on Friday.

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

-- Written by a member of TheStreet Ratings Staff

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