The following ratings changes were generated on Tuesday, Oct. 14.
( GR), which supplies components, systems and services to the commercial and general aviation airplane markets and global defense and space markets, from buy to hold. Strengths include revenue growth, an impressive record of earnings per share growth and compelling growth in net income. Weaknesses include poor profit margins and a generally disappointing performance in the stock itself.
At 17.3% since the same quarter one year prior, revenue growth came in higher than the industry average of 3.7%. Goodrich reported significant EPS improvement in the most recent quarter, to $3.88 from $3.78 in the same quarter a year ago. The market expects further improvement to $4.95 this year. Return on equity has improved slightly over the same quarter last year, outperforming the S&P 500 but underperforming the aerospace and defense industry average. Goodrich's gross profit margin is lower than desirable at 33.8%, having decreased from the same quarter last year, but net profit margin, at 10.1%, is above the industry average.
Shares are down 49.76% on the year, underperforming the S&P 500. The overall market trend is bound to be a significant factor, and the stock's sharp decline last year could be seen 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.
, which explores and produces crude oil and natural gas, from buy to hold. Strengths include robust revenue growth and good cash flow from operations, and weaknesses include deteriorating net income, poor profit margins and generally poor debt management.
At 33.6%, Marathon's revenue growth has outpaced the industry average of 31.6% but doesn't appear to have trickled down to the company's bottom line, displayed by a decline in EPS, to $5.71 from $6.87. EPS have declined over the past two years, but the consensus estimate suggests this trend should reverse in the coming year and EPS should rise to $6.32. Net operating cash flow has significantly increased by 59.17% to $2,133.00 million when compared with the same quarter last year, exceeding the industry average cash flow growth rate of 19.22%.
Marathon's gross profit margin is extremely low at 11%, having decreased significantly from the past year. In addition, net profit margin of 3.8% trails the industry average. Net income has decreased by 50.1%, from $1,550 million to $774 million, when compared with the same quarter a year ago, significantly underperforming the S&P 500 and the oil, gas and consumable fuels industry.
We've downgraded industrial and engineering company
from buy to hold. Strengths include its robust revenue growth, largely solid financial position with reasonabledebt levels by most measures and attractive valuation levels. Weaknesses include a generally disappointing performance in the stock itself and disappointing return on equity.
At 16.2%, revenue growth has slightly outpaced the industry average of 15.7% since the same quarter one year prior. The debt-to-equity ratio is somewhat low at 0.67, below the industry average, implying that there has been a relatively successful effort in the management of debt levels. The company also maintains an adequate quick ratio of 1.04, which illustrates theability to avoid short-term cash problems. Harsco's gross profit margin, in increase from last year, is 35.4%, which we consider to be strong. However, the net profit margin of 8.20% trails the industry average.ROE has slightly decreased from the same quarter one year prior, implying a minor weakness in the organization and underperforming the machinery industry, though it exceeds that of the S&P 500. Shares have fallen 56.61% on the year, underperforming the S&P 500. But don't assume that the lower stock price tags Harsco as cheap and attractive. The reality is that, based on its current price in relation to its earnings, HSC is still more expensive than most of the other companies in its industry
, which provides services and products to energy, industrial and government customers, from buy to hold. Strengths include EPS growth, robust revenue growth and a largely solid financial position with reasonable debt levels by most measures. Weaknesses include deteriorating net income, poor profit margins and a generallydisappointing performance in the stock itself.
Revenues rose by 20.1% since the same quarter last year, boosting EPS but underperforming the industry average of 29.6%. The current debt-to-equity ratio, 0.37, is low and is below the industry average, implying that there has been successful management of debt levels. Halliburton has a quick ratio of 2.10, which demonstrates the ability of the company to cover short-term liquidity needs. Net operating cash flow has slightly increased to $460 million, or 4.30% when compared with the same quarter last year. However, its cash flow growth rate is still lower than the industry average of 18.8%.
Net income has decreased by 66.9% when compared with the same quarter a year ago, from $1,530 million to $507 million. This significantly underperforms the S&P 500 and the energy equipment and services industry. The company's gross profit margin of 26.1% is lower than desirable, having decreased from the same quarter last year. Also, the net profit margin of 11.30% significantly trails the industry average.
We've downgraded real estate investment trust
Vornado Realty Trust
from buy to hold. This rating is based on the company's strong revenue growth, improved cash position solid return on assets, countered by a decline in earnings and lower return on equity. Although the company has undertaken strategic initiatives to strengthen its operations, high leverage and a possible failure to finance pending projects due to the downturn in the global economy may restrict future performance.
Vornado Realty Trust's New York revenue advanced 18.3% year over-year to $261.99 million, Washington, D.C., revenue spiked 11.1% to $153.38 million, and retail revenue jumped 7.0% to $129.99 million. Cash and cash equivalents during the latest second quarter more than doubled to $1.71 billion from $743.51 million a year ago, supported by a 3.4% increase in cash flow from operating activities to $231.94 million. Return on assets improved 104 basis points to 3.66% on a 2.9% reduction in asset base. As a result of lower net income during the quarter and a 2.2% rise in stockholders' equity, return on equity dropped 26 basis points to 8.15%. The company's debt-to-equity ratio improved to 1.92 from 2.02.
Recently, Vornado agreed to set up a 50/50 joint venture with Reliance Industries Limited of India under which each partner will commit around $250 million for the joint venture to acquire, develop and operate retail shopping centers across key cities in India. Vornado also sold its Tysons Dulles Plaza office building complex in Virginia for $152.80 million and recorded a net gain of $56.83 million
Other ratings changes include
, downgraded from buy to hold, and
( XFN), downgraded from hold to sell.
All ratings changes generated on Oct. 14 are listed below.
Each business day, TheStreet.com Ratings updates its ratings on the stocks it covers. The proprietary ratings model projects a stock's total return potential over a 12-month period, including both price appreciation and dividends. Buy, hold or sell ratings designate how the Ratings group expects these stocks to perform against a general benchmark of the equities market and interest rates. While the ratings model is quantitative, it uses both subjective and objective elements. For instance, subjective elements include expected equities market returns, future interest rates, implied industry outlook and company earnings forecasts. Objective elements include volatility of past operating revenue, financial strength and company cash flows. However, the rating does not incorporate all of the factors that can alter a stock's performance. For example, it doesn't always factor in recent corporate or industry events that could affect the stock price, nor does it include recent technology developments and competitive dynamics that may affect the company. For those reasons, we believe a rating alone cannot tell the whole story, and that it should be part of an investor's overall research.
This article was written by a staff member of TheStreet.com Ratings.