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 robust revenue growth and notable return on equity. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and poor profit margins.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 3.9%. Since the same quarter one year prior, revenues rose by 25.1%. 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.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Chemicals industry and the overall market, KOPPERS HOLDINGS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- KOPPERS HOLDINGS 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. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, KOPPERS HOLDINGS INC reported lower earnings of $1.78 versus $2.15 in the prior year. This year, the market expects an improvement in earnings ($3.48 versus $1.78).
- Net operating cash flow has decreased to $32.40 million or 20.97% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- The share price of KOPPERS HOLDINGS INC has not done very well: it is down 6.90% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. 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.
Koppers Holdings Inc., through its subsidiaries, engages in the production and sale of carbon compounds and commercial wood treatment products and services to aluminum, railroad, specialty chemical, utility, rubber, concrete, and steel industries. The company has a P/E ratio of 14, equal to the average chemicals industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Koppers has a market cap of $788.9 million and is part of the
industry. Shares are up 9.6% year to date as of the close of trading on Friday.
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-- Written by a member of TheStreet Ratings Staff