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 reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, disappointing return on equity and weak operating cash flow.
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Highlights from the ratings report include:
- RIC's revenue growth has slightly outpaced the industry average of 1.6%. Since the same quarter one year prior, revenues slightly increased by 6.3%. 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.
- RIC's debt-to-equity ratio is very low at 0.07 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.79, which clearly demonstrates the ability to cover short-term cash needs.
- 42.70% is the gross profit margin for RICHMONT MINES INC which we consider to be strong. Regardless of RIC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, RIC's net profit margin of 7.20% is significantly lower than the same period one year prior.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 51.16%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 77.77% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- 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 Metals & Mining industry. The net income has significantly decreased by 76.7% when compared to the same quarter one year ago, falling from $8.71 million to $2.03 million.
Richmont Mines Inc. engages in the acquisition, exploration, development, and operation of mineral properties, principally gold in Canada. It operates the Beaufor Mine in Quebec and the Island Gold Mine in Ontario, as well as engages in the development of the Francoeur Mine in Quebec. The company has a P/E ratio of 6.5, equal to the average metals & mining industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Richmont Mines has a market cap of $128.9 million and is part of the
industry. Shares are down 61.5% year to date as of the close of trading on Tuesday.
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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.