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 (
-- Joy Global
) has been reiterated by TheStreet Ratings as a hold with a ratings score of C+ . The company's strengths can be seen in multiple areas, such as its robust revenue growth, growth in earnings per share and expanding profit margins. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.
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Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 10.1%. Since the same quarter one year prior, revenues rose by 22.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
- JOY GLOBAL INC has improved earnings per share by 13.0% 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 two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, JOY GLOBAL INC increased its bottom line by earning $5.92 versus $4.40 in the prior year. This year, the market expects an improvement in earnings ($7.11 versus $5.92).
- The debt-to-equity ratio is somewhat low, currently at 0.65, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.82 is somewhat weak and could be cause for future problems.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Machinery industry average, but is greater than that of the S&P 500. The net income increased by 11.8% when compared to the same quarter one year prior, going from $173.11 million to $193.52 million.
- JOY's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 25.63%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
Joy Global Inc. engages in the manufacture and servicing of mining equipment for the extraction of coal, copper, iron ore, oil sands, and other minerals. The company operates in two segments, Underground Mining Machinery and Surface Mining Equipment. The company has a P/E ratio of 8.6, below the average industrial industry P/E ratio of 8.9 and below the S&P 500 P/E ratio of 17.7. Joy Global has a market cap of $6.39 billion and is part of the
industry. Shares are down 18.3% year to date as of the close of trading on Tuesday.
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--Written by a member of TheStreet Ratings Staff.
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