NEW YORK (
) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself and poor profit margins.
Highlights from the ratings report include:
- TEX's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 33.24%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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 gross profit margin for TEREX CORP is rather low; currently it is at 17.00%. Regardless of TEX's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 0.00% trails the industry average.
- 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 Machinery industry and the overall market, TEREX CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has increased to -$142.30 million or 27.47% when compared to the same quarter last year. Despite an increase in cash flow, TEREX CORP's cash flow growth rate is still lower than the industry average growth rate of 61.41%.
- The debt-to-equity ratio is somewhat low, currently at 0.65, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.23, which illustrates the ability to avoid short-term cash problems.
Terex Corporation manufactures machinery products, equipments, and related replacement parts and components for the construction, infrastructure, quarrying, shipping, transportation, power, and energy industries. Terex has a market cap of $1.6 billion and is part of the
industry. Shares are down 55.9% year to date as of the close of trading on Tuesday.
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