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 revenue growth, notable return on equity and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including poor profit margins, weak operating cash flow and generally higher debt management risk.
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Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 13.6%. Since the same quarter one year prior, revenues slightly increased by 6.2%. 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.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Metals & Mining industry and the overall market, METALS USA HOLDINGS CORP's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- The gross profit margin for METALS USA HOLDINGS CORP is currently extremely low, coming in at 8.20%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 3.50% significantly trails the industry average.
- Net operating cash flow has significantly decreased to -$0.50 million or 119.23% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
Metals USA Holdings Corp. provides carbon steel, stainless steel, aluminum, red metals, manufactured metal components, and inventory management services in the United States and Canada. The company has a P/E ratio of 8.3, equal to the average metals & mining industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Metals USA has a market cap of $551.7 million and is part of the
industry. Shares are up 30.6% year to date as of the close of trading on Friday.
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-- Written by a member of TheStreet Ratings Staff