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, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income and disappointing return on equity.
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Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 4.3%. Since the same quarter one year prior, revenues rose by 24.7%. 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 debt-to-equity ratio is somewhat low, currently at 0.67, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels.
- 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. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Paper & Forest Products industry. The net income has significantly decreased by 382.8% when compared to the same quarter one year ago, falling from $3.29 million to -$9.30 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Paper & Forest Products industry and the overall market, POPE RESOURCES/DE -LP's return on equity significantly trails that of both the industry average and the S&P 500.
Pope Resources, A Delaware Limited Partnership engages in managing timber resources in the United States. It operates in three segments: Fee Timber, Timberland Management & Consulting, and Real Estate. The company has a P/E ratio of 28.4, below the average materials & construction industry P/E ratio of 40.3 and above the S&P 500 P/E ratio of 17.7. Pope has a market cap of $245.3 million and is part of the
industry. Shares are up 31.7% year to date as of the close of trading on Thursday.
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-- Written by a member of TheStreet Ratings Staff
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.