Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model
NEW YORK (
-- ACCO Brands
) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its notable return on equity, robust revenue growth and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, generally higher debt management risk and weak operating cash flow.
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Highlights from the ratings report include:
- Compared to other companies in the Commercial Services & Supplies industry and the overall market, ACCO BRANDS CORP's return on equity exceeds that of both the industry average and the S&P 500.
- ACCO's very impressive revenue growth greatly exceeded the industry average of 13.1%. Since the same quarter one year prior, revenues leaped by 51.0%. 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.
- 35.50% is the gross profit margin for ACCO BRANDS CORP which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -2.35% trails the industry average.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 28.50%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 162.50% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- 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 Commercial Services & Supplies industry. The net income has significantly decreased by 233.0% when compared to the same quarter one year ago, falling from $9.40 million to -$12.50 million.
ACCO Brands Corporation engages in the design, manufacture, marketing, and distribution of office products primarily in the United States, Australia, the United Kingdom, and Canada. The company has a P/E ratio of 5.2, below the S&P 500 P/E ratio of 17.7. ACCO has a market cap of $950.1 million and is part of the consumer goods sector and consumer non-durables industry. Shares are up 14.4% year to date as of the close of trading on Thursday.
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-- Written by a member of TheStreet Ratings Staff
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