NEW YORK (TheStreet) -- Zep Inc. (ZEP - Get Report), a provider of cleaning and maintenance chemicals, reported a 13% increase in Adjusted EBIDA to $19.3 million year over year for the 2014 third quarter.
The company posted a 20% spike in diluted earnings per share to 30 cents for the most recent quarter, and a 0.6% growth in net sales to $187 million, over the 2013 third quarter.
Shares of Zep closed lower by -1.90% to $18.03 on Thursday.
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Separately, TheStreet Ratings team rates ZEP INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation: "We rate ZEP INC (ZEP) 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 good cash flow from operations, expanding profit margins and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity." Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has increased to -$6.41 million or 27.99% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -1.39%.
- The gross profit margin for ZEP INC is rather high; currently it is at 50.43%. Regardless of ZEP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ZEP's net profit margin of -0.43% significantly underperformed when compared to the industry average.
- The debt-to-equity ratio of 1.19 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, ZEP maintains a poor quick ratio of 0.74, which illustrates the inability to avoid short-term cash problems.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. In comparison to the other companies in the Chemicals industry and the overall market, ZEP INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- You can view the full analysis from the report here: ZEP Ratings Report