Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link
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, revenue growth and good cash flow from operations. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet.
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Highlights from the ratings report include:
- Powered by its strong earnings growth of 102.80% and other important driving factors, this stock has surged by 64.13% over the past year, outperforming the rise in the S&P 500 Index during the same period. 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.
- Despite its growing revenue, the company underperformed as compared with the industry average of 3.4%. Since the same quarter one year prior, revenues slightly increased by 1.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- SEALED AIR CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SEALED AIR CORP swung to a loss, reporting -$8.33 versus $0.86 in the prior year. This year, the market expects an improvement in earnings ($1.28 versus -$8.33).
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Containers & Packaging industry average, but is greater than that of the S&P 500. The net income increased by 103.1% when compared to the same quarter one year prior, rising from -$1,232.40 million to $37.70 million.
- The debt-to-equity ratio is very high at 3.25 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, SEE maintains a poor quick ratio of 0.81, which illustrates the inability to avoid short-term cash problems.
Sealed Air Corporation, through its subsidiaries, provides food safety and security, facility hygiene, and product protection solutions worldwide. The company operates through three segments: Food & Beverage (F&B), Institutional & Laundry (I&L), and Protective Packaging. Sealed Air has a market cap of $6.3 billion and is part of the consumer goods sector and consumer non-durables industry. Shares are down 8.8% year to date as of the close of trading on Monday.
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