NEW YORK (
-- A Schulman
) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 17.0%. Since the same quarter one year prior, revenues rose by 45.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The current debt-to-equity ratio, 0.38, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.25, which illustrates the ability to avoid short-term cash problems.
- Net operating cash flow has significantly increased by 131.82% to $10.55 million when compared to the same quarter last year. In addition, SCHULMAN (A.) INC has also vastly surpassed the industry average cash flow growth rate of 6.56%.
- SCHULMAN (A.) INC's earnings per share declined by 34.1% in the most recent quarter compared to 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, SCHULMAN (A.) INC increased its bottom line by earning $1.56 versus $0.42 in the prior year. This year, the market expects an improvement in earnings ($2.08 versus $1.56).
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Chemicals industry and the overall market, SCHULMAN (A.) INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
A. Schulman, Inc. supplies plastic compounds and resins to consumer products, industrial, automotive, and packaging markets. The company has a P/E ratio of 15.1, above the average chemicals industry P/E ratio of 14.7 and below the S&P 500 P/E ratio of 17.7. A Schulman has a market cap of $613.7 million and is part of the
industry. Shares are down 3.5% year to date as of the close of trading on Friday.
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