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Why MRC Global (MRC) Is Falling Today

NEW YORK (TheStreet) -- MRC Global (MRC) was falling 14% to $25.42 Friday after its missed analysts' earnings estimates for the fourth quarter.

For the fourth quarter MRC posted earnings of 32 cents a share, falling 9 cents short of analysts' estimates of 41 cents a share. The company's revenue grew 2.9% to $1.34 billion for the quarter, while analysts surveyed by Thomson Reuters expected revenue of $1.32 billion.

Looking forward to 2014, MRC expects revenue between $5.5 billion and $5.8 billion for the full year. Analysts expect revenue of $5.7 billion for the year.

Must read: Notable Two Hundred Day Moving Average Cross - MRC

TheStreet Ratings team rates MRC GLOBAL INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate MRC GLOBAL INC (MRC) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its notable return on equity and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, poor profit margins and weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • MRC GLOBAL INC's earnings per share declined by 29.6% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, MRC GLOBAL INC increased its bottom line by earning $1.24 versus $0.31 in the prior year. This year, the market expects an improvement in earnings ($1.70 versus $1.24).
  • In comparison to the other companies in the Trading Companies & Distributors industry and the overall market, MRC GLOBAL INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • MRC, with its decline in revenue, underperformed when compared the industry average of 8.0%. Since the same quarter one year prior, revenues slightly dropped by 9.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Net operating cash flow has decreased to $59.48 million or 47.07% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Trading Companies & Distributors industry. The net income has significantly decreased by 30.2% when compared to the same quarter one year ago, falling from $55.54 million to $38.76 million.
  • You can view the full analysis from the report here: MRC Ratings Report

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