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 hold to sell. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, disappointing return on equity, weak operating cash flow and poor profit margins.
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Highlights from the ratings report include:
- The debt-to-equity ratio is very high at 8.35 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, TOWR maintains a poor quick ratio of 0.86, which illustrates the inability to avoid short-term cash problems.
- 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 Auto Components industry and the overall market, TOWER INTERNATIONAL INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to $1.29 million or 77.21% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- The gross profit margin for TOWER INTERNATIONAL INC is rather low; currently it is at 15.70%. Regardless of TOWR'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 0.47% trails the industry average.
- TOWER INTERNATIONAL INC 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, TOWER INTERNATIONAL INC swung to a loss, reporting -$0.58 versus $0.38 in the prior year. This year, the market expects an improvement in earnings ($1.64 versus -$0.58).
Tower International, Inc. engages in the manufacture and sale of engineered structural metal components and assemblies for the automotive original equipment manufacturers in North America, Europe, Asia, and South America. Tower International has a market cap of $405.9 million and is part of the industrial goods sector and industrial industry. Shares are up 135.9% 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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