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 (
) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.
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Highlights from the ratings report include:
- The current debt-to-equity ratio, 0.32, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.28, which illustrates the ability to avoid short-term cash problems.
- LXU's share price has surged by 28.84% over the past year, reflecting the market's general trend, despite their weak earnings growth during the last quarter. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- The gross profit margin for LSB INDUSTRIES INC is currently extremely low, coming in at 14.50%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -0.04% is significantly below that of the industry average.
- Net operating cash flow has significantly decreased to -$20.17 million or 282.08% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
LSB Industries, Inc., through its subsidiaries, engages in the manufacture and sale of chemical products, geothermal and water source heat pumps, and air handling products. The company operates in two segments, Chemical Business and Climate Control Business. The company has a P/E ratio of 18.1, above the S&P 500 P/E ratio of 17.7. LSB has a market cap of $760.6 million and is part of the basic materials sector and chemicals industry. Shares are down 3.5% 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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