Rating Change #4
has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, attractive valuation levels, good cash flow from operations and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.
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Highlights from the ratings report include:
- MTRN's debt-to-equity ratio is very low at 0.28 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.02, which illustrates the ability to avoid short-term cash problems.
- Net operating cash flow has significantly increased by 136.52% to $1.67 million when compared to the same quarter last year. In addition, MATERION CORP has also vastly surpassed the industry average cash flow growth rate of 68.53%.
- MTRN, with its decline in revenue, slightly underperformed the industry average of 20.2%. Since the same quarter one year prior, revenues fell by 26.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- In its most recent trading session, MTRN has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
Materion Corporation, through its subsidiaries, produces and sells engineered materials for use in various electrical, electronic, thermal, and structural applications primarily in the United States, Europe, and Asia. The company has a P/E ratio of 24.7, above the S&P 500 P/E ratio of 17.7. Materion has a market cap of $560.9 million and is part of the basic materials sector and metals & mining industry. Shares are up 6.5% year to date as of the close of trading on Wednesday.
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