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NEW YORK (TheStreet) -- Shares of Constellium NV (CSTM) - Get Constellium SE Class A Report are flat at $23.32 on very heavy trading volume after the French firm, which makes aluminum products for a number of markets, said it would buy Wise Metals Intermediate Holdings LLC in a deal valued at $1.4 billion, including $455 million in cash and the assumption of $945 million in debt, as it looks to capture more of the growing U.S. market for automotive aluminum sheet, the Wall Street Journal reports.

Privately held and Alabama-based Wise currently supplies aluminum for the beverage and food can industry. Constellium is looking to compete in the U.S. with Alcoa (AA) - Get Alcoa Corp. Report . and Novelis, a unit of India's HindalcoIndustries, which have both recently expanded auto sheet production, according to the Journal.

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TheStreet Ratings team rates CONSTELLIUM NV as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:

TheStreet Recommends

"We rate CONSTELLIUM NV (CSTM) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its notable return on equity, revenue growth and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including poor profit margins and generally higher debt management risk."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to other companies in the Metals & Mining industry and the overall market, CONSTELLIUM NV's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • CSTM's revenue growth has slightly outpaced the industry average of 0.6%. Since the same quarter one year prior, revenues slightly increased by 3.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 30.98% over the past year, a rise that has exceeded that of the S&P 500 Index. Although CSTM had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
  • The debt-to-equity ratio is very high at 11.15 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, CSTM's quick ratio is somewhat strong at 1.21, demonstrating the ability to handle short-term liquidity needs.
  • The gross profit margin for CONSTELLIUM NV is rather low; currently it is at 15.33%. Regardless of CSTM's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, CSTM's net profit margin of 3.04% is significantly lower than the industry average.
  • You can view the full analysis from the report here: CSTM Ratings Report

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