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 largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.
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Highlights from the ratings report include:
- SSD's debt-to-equity ratio is very low at 0.00 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 3.28, which clearly demonstrates the ability to cover short-term cash needs.
- 46.90% is the gross profit margin for SIMPSON MANUFACTURING INC which we consider to be strong. Regardless of SSD's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SSD's net profit margin of 3.10% compares favorably to the industry average.
- SSD, with its decline in revenue, slightly underperformed the industry average of 2.3%. Since the same quarter one year prior, revenues slightly dropped by 2.6%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- SIMPSON MANUFACTURING INC's earnings per share declined by 33.3% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, SIMPSON MANUFACTURING INC reported lower earnings of $0.87 versus $1.03 in the prior year. For the next year, the market is expecting a contraction of 5.2% in earnings ($0.83 versus $0.87).
- 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 Building Products industry. The net income has significantly decreased by 33.4% when compared to the same quarter one year ago, falling from $7.20 million to $4.80 million.
Simpson Manufacturing Co., Inc., through its subsidiaries, engages in the design, engineering, manufacture, and sale of building construction products. The company has a P/E ratio of 35.1, above the S&P 500 P/E ratio of 17.7. Simpson has a market cap of $1.4 billion and is part of the industrial goods sector and industrial industry. Shares are down 12.5% 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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