NEW YORK ( TheStreet) -- Simpson Manufacturing (NYSE: SSD) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we find that the stock has experienced relatively poor performance when compared with the S&P 500 during the past year. Highlights from the ratings report include:
- In its most recent trading session, SSD has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
- The change in net income from the same quarter one year ago has significantly exceeded that of the Building Products industry average, but is less than that of the S&P 500. The net income has significantly decreased by 59.8% when compared to the same quarter one year ago, falling from -$2.82 million to -$4.50 million.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Building Products industry and the overall market on the basis of return on equity, SIMPSON MANUFACTURING INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- SSD has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 5.07, which clearly demonstrates the ability to cover short-term cash needs.
- SSD's revenue growth has slightly outpaced the industry average of 6.0%. Since the same quarter one year prior, revenues slightly increased by 3.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.