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 solid stock price performance, compelling growth in net income and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and poor profit margins.
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Highlights from the ratings report include:
- The strong earnings growth this company has enjoyed -- up -- has apparently played a role in driving up its share price by a solid 25.61%. In addition, the rise in the general market has likely contributed to this stock's strong performance during this past year.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 net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Construction & Engineering industry. The net income increased by 100.8% when compared to the same quarter one year prior, rising from $4.73 million to $9.51 million.
- NWPX's debt-to-equity ratio is very low at 0.29 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.87 is somewhat weak and could be cause for future problems.
- The gross profit margin for NORTHWEST PIPE CO is rather low; currently it is at 17.80%. Regardless of NWPX's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, NWPX's net profit margin of 6.76% compares favorably to the industry average.
- Net operating cash flow has significantly decreased to $3.84 million or 78.26% when compared to the same quarter last year. Despite a decrease in cash flow NORTHWEST PIPE CO is still fairing well by exceeding its industry average cash flow growth rate of -112.04%.
Northwest Pipe Company manufactures and markets welded steel pipe and other products in the United States, Canada, and Mexico. The company has a P/E ratio of 12.4, below the S&P 500 P/E ratio of 17.7. Northwest Pipe has a market cap of $259.6 million and is part of the basic materials sector and metals & mining industry. Shares are up 15.3% year to date as of the close of trading on Friday.
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-- Written by a member of TheStreet Ratings Staff
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