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 (
) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, generally higher debt management risk and poor profit margins.
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Highlights from the ratings report include:
- Despite its growing revenue, the company underperformed as compared with the industry average of 2.2%. Since the same quarter one year prior, revenues slightly increased by 0.9%. 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 company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Leisure Equipment & Products industry and the overall market, BRUNSWICK CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.
- BRUNSWICK CORP has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, BRUNSWICK CORP turned its bottom line around by earning $0.77 versus -$1.25 in the prior year. This year, the market expects an improvement in earnings ($1.31 versus $0.77).
- 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 Leisure Equipment & Products industry. The net income has significantly decreased by 57.4% when compared to the same quarter one year ago, falling from $4.70 million to $2.00 million.
- The debt-to-equity ratio is very high at 3.22 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, BC maintains a poor quick ratio of 0.92, which illustrates the inability to avoid short-term cash problems.
Brunswick Corporation designs, manufactures, and markets recreation products worldwide. The company has a P/E ratio of 19.9, below the average consumer durables industry P/E ratio of 20 and above the S&P 500 P/E ratio of 17.7. Brunswick has a market cap of $1.9 billion and is part of the consumer goods sector and consumer durables industry. Shares are up 17.6% year to date as of the close of trading on Friday.
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-- Written by a member of TheStreet Ratings Staff
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