NEW YORK (
-- Owens Corning Incorporated
) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its notable return on equity, largely solid financial position with reasonable debt levels by most measures and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the ratings report include:
- OWENS CORNING's earnings per share declined by 50.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, OWENS CORNING increased its bottom line by earning $7.28 versus $0.49 in the prior year. For the next year, the market is expecting a contraction of 69.6% in earnings ($2.21 versus $7.28).
- OC, with its decline in revenue, slightly underperformed the industry average of 0.3%. Since the same quarter one year prior, revenues slightly dropped by 2.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The current debt-to-equity ratio, 0.52, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.81 is somewhat weak and could be cause for future problems.
- 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. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Building Products industry and the overall market, OWENS CORNING's return on equity significantly exceeds that of both the industry average and the S&P 500.
Owens Corning, through its subsidiaries, provides composite and building materials systems worldwide. It operates in two segments, Composites and Building Materials. The company has a P/E ratio of 5.1, equal to the average materials & construction industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Owens Corning has a market cap of $4.6 billion and is part of the
industry. Shares are up 19.1% year to date as of the close of trading on Tuesday.
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