LMI Aerospace Inc. Stock Downgraded (LMIA)
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) -- LMI Aerospace (Nasdaq:LMIA) 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 increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.
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- LMIA's very impressive revenue growth greatly exceeded the industry average of 4.4%. Since the same quarter one year prior, revenues leaped by 58.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Even though the current debt-to-equity ratio is 1.37, it is still below the industry average, suggesting that this level of debt is acceptable within the Aerospace & Defense industry. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.32 is sturdy.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
- The gross profit margin for LMI AEROSPACE INC is currently lower than what is desirable, coming in at 25.80%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.73% trails that of the industry average.
- Net operating cash flow has significantly decreased to -$10.46 million or 2544.39% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
-- Written by a member of TheStreet Ratings Staff
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