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 (
Rockwell Automation Rises on $2.2 Billion Deal for Plex Systems
Rockwell Automation agreed to buy Plex Systems, a manufacturing-software platform, for $2.2 billion from the private-equity firm Francisco Partners.
) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, poor profit margins and weak operating cash flow.
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Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 28.8%. Since the same quarter one year prior, revenues slightly increased by 7.6%. 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.
- LZB's debt-to-equity ratio is very low at 0.02 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, LZB has a quick ratio of 2.14, which demonstrates the ability of the company to cover short-term liquidity needs.
- The gross profit margin for LA-Z-BOY INC is currently lower than what is desirable, coming in at 29.70%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.50% trails that of the industry average.
- Net operating cash flow has significantly decreased to -$15.35 million or 607.80% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
La-Z-Boy Incorporated manufactures, markets, imports, distributes, and retails upholstery products, accessories, and casegoods furniture products under the La-Z-Boy brand name primarily in the United States and Canada. It operates in three segments: Upholstery, Casegoods, and Retail. The company has a P/E ratio of 8.3, above the average consumer durables industry P/E ratio of 7.7 and below the S&P 500 P/E ratio of 17.7. La-Z-Boy has a market cap of $673.6 million and is part of the
industry. Shares are up 16.8% year to date as of the close of trading on Wednesday.
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-- Written by a member of TheStreet Ratings Staff