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 impressive record of earnings per share growth, robust revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, poor profit margins and weak operating cash flow.
Highlights from the ratings report include:
- GRUPO SIMEC SA DE CV has improved earnings per share by 47.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, GRUPO SIMEC SA DE CV turned its bottom line around by earning $0.44 versus -$0.15 in the prior year. This year, the market expects an improvement in earnings ($6.45 versus $0.44).
- SIM's revenue growth trails the industry average of 52.4%. Since the same quarter one year prior, revenues rose by 31.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Net operating cash flow has significantly decreased to $48.41 million or 51.43% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- SIM has underperformed the S&P 500 Index, declining 16.33% from its price level of one year ago. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
Grupo Simec, S.A.B. de C.V. engages in the manufacture, processing, and distribution of special bar quality (SBQ) and structural steel products primarily in the United States, Mexico, and Canada. The company has a P/E ratio of 14, above the average metals & mining industry P/E ratio of 6.8 and below the S&P 500 P/E ratio of 17.7. Group Simec SAB de CV has a market cap of $1 billion and is part of the
industry. Shares are down 21.3% year to date as of the close of trading on Thursday.
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