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, increase in net income and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including generally poor debt management, weak operating cash flow and a generally disappointing performance in the stock itself.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 18.9%. Since the same quarter one year prior, revenues slightly increased by 5.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the Household Durables industry average, but is less than that of the S&P 500. The net income increased by 12.5% when compared to the same quarter one year prior, going from $130.40 million to $146.70 million.
- 40.10% is the gross profit margin for NEWELL RUBBERMAID INC which we consider to be strong. Regardless of NWL's high profit margin, it has managed to decrease from the same period last year.
- NWL has underperformed the S&P 500 Index, declining 13.65% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- The debt-to-equity ratio of 1.16 is relatively high when compared with the industry average, suggesting a need for better debt level management. To add to this, NWL has a quick ratio of 0.60, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
Newell Rubbermaid Inc. designs, manufactures, sources, packages, and distributes consumer and commercial products. It operates in three segments: Home & Family; Office Products; and Tools, Hardware & Commercial Products. The company has a P/E ratio of 12.1, equal to the average consumer durables industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Newell Rubbermaid has a market cap of $3.9 billion and is part of the
industry. Shares are down 27.2% year to date as of the close of trading on Friday.
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