NEW YORK (TheStreet) -- Cloud Peak (CLD - Get Report) has been downgraded to "market perform" from "outperform" with a $21 price target, BMO Capital said Wednesday. The firm said it was a valuation call as the company's business has been affected by severe weather.
Separately, TheStreet Ratings team rates CLOUD PEAK ENERGY INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate CLOUD PEAK ENERGY INC (CLD) 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 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 feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 7.5%. Since the same quarter one year prior, revenues slightly dropped by 5.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- CLD's debt-to-equity ratio of 0.72 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.26 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.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, CLOUD PEAK ENERGY INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- The gross profit margin for CLOUD PEAK ENERGY INC is rather low; currently it is at 19.97%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 3.93% trails that of the industry average.
- You can view the full analysis from the report here: CLD Ratings Report