NEW YORK (TheStreet) -- Shares of Horsehead Holding Corp. (ZINC - Get Report) are down by -3.10% to $17.80 in pre-market trading on Tuesday following a ratings downgrade to "market perform" from "outperform" at FBR Capital (FBRC - Get Report).
The firm said it downgraded the producer of zinc and nickel-based products based on its belief the company's investors "have largely priced in the potential earnings growth [of $90 million to $110 million in EBITDA], leaving limited upside."
FBR maintained its $21 price target on Horsehead Holding's stock.
Separately, TheStreet Ratings team rates HORSEHEAD HOLDING CORP as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate HORSEHEAD HOLDING CORP (ZINC) 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 solid stock price performance, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Compared to its closing price of one year ago, ZINC's share price has jumped by 42.83%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- HORSEHEAD HOLDING CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, HORSEHEAD HOLDING CORP continued to lose money by earning -$0.30 versus -$0.69 in the prior year. This year, the market expects an improvement in earnings ($0.47 versus -$0.30).
- ZINC, with its decline in revenue, underperformed when compared the industry average of 4.5%. Since the same quarter one year prior, revenues slightly dropped by 6.9%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- Net operating cash flow has significantly decreased to -$21.96 million or 2945.76% 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 Metals & Mining industry. The net income has significantly decreased by 74.2% when compared to the same quarter one year ago, falling from $2.83 million to $0.73 million.
- You can view the full analysis from the report here: ZINC Ratings Report