NEW YORK (TheStreet) -- Shares of Layne Christensen Company (LAYN - Get Report) closed up 5.53% to $12.59 on Monday after an amended SEC filing from Mario Gabelli's fund, GAMCO Investors Inc. (GBL - Get Report), disclosed that it raised its stake in the company to 15.66% for the quarterly period ended April 30, up from its 14.64% stake as of the quarterly period ended October 31, 2013.
Separately, TheStreet Ratings team rates LAYNE CHRISTENSEN CO as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate LAYNE CHRISTENSEN CO (LAYN) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Construction & Engineering industry average. The net income has decreased by 16.6% when compared to the same quarter one year ago, dropping from -$23.78 million to -$27.73 million.
- 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. Compared to other companies in the Construction & Engineering industry and the overall market, LAYNE CHRISTENSEN CO's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for LAYNE CHRISTENSEN CO is rather low; currently it is at 15.21%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -14.49% is significantly below that of the industry average.
- Net operating cash flow has significantly decreased to -$12.69 million or 217.48% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Looking at the price performance of LAYN's shares over the past 12 months, there is not much good news to report: the stock is down 39.15%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- You can view the full analysis from the report here: LAYN Ratings Report