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 hold to sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, poor profit margins and weak operating cash flow.
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Highlights from the ratings report include:
- GENCORP INC 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. Stable earnings per share over the past year indicate the company has managed its earnings and share float. We anticipate this stability to falter in the coming year and, in turn, the company to deliver lower earnings per share than prior full year. During the past fiscal year, GENCORP INC reported lower earnings of $0.05 versus $0.06 in the prior year. For the next year, the market is expecting a contraction of 100.0% in earnings ($0.00 versus $0.05).
- 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 Aerospace & Defense industry. The net income has significantly decreased by 891.7% when compared to the same quarter one year ago, falling from $1.20 million to -$9.50 million.
- The gross profit margin for GENCORP INC is currently extremely low, coming in at 12.60%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -3.90% is significantly below that of the industry average.
- Net operating cash flow has decreased to $15.70 million or 13.73% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Compared to its closing price of one year ago, GY's share price has jumped by 72.46%, exceeding the performance of the broader market during that same time frame. Despite the fact that the stock's value has already enjoyed nice gains in the past year, we feel that the risks surrounding an investment in this stock outweigh any potential future returns.
GenCorp Inc. engages in the manufacture and sale of aerospace and defense products and systems in the United States. The company operates in two segments, Aerospace and Defense, and Real Estate. The company has a P/E ratio of -92.7, below the S&P 500 P/E ratio of 17.7. GenCorp has a market cap of $504.6 million and is part of the industrial goods sector and aerospace/defense industry. Shares are up 56.8% year to date as of the close of trading on Wednesday.
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