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 (
-- Twin Disc
) 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 increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.
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Highlights from the ratings report include:
- TWIN's debt-to-equity ratio is very low at 0.25 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.07, which illustrates the ability to avoid short-term cash problems.
- TWIN, with its decline in revenue, slightly underperformed the industry average of 20.0%. Since the same quarter one year prior, revenues fell by 28.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The gross profit margin for TWIN DISC INC is currently lower than what is desirable, coming in at 29.80%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -1.10% trails that of the industry average.
- Net operating cash flow has significantly decreased to -$1.29 million or 70.86% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
Twin Disc, Incorporated designs, manufactures, and sells marine and heavy duty off-highway power transmission equipment worldwide. The company has a P/E ratio of 62.5, above the S&P 500 P/E ratio of 17.7. Twin Disc has a market cap of $281.1 million and is part of the industrial goods sector and industrial industry. Shares are up 43.4% 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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