NEW YORK ( TheStreet) -- Northwest Pipe Company (Nasdaq: NWPX) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.

Highlights from the ratings report include:
  • The gross profit margin for NORTHWEST PIPE CO is rather low; currently it is at 15.50%. Regardless of NWPX's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, NWPX's net profit margin of 3.20% compares favorably to the industry average.
  • Powered by its strong earnings growth of 245.45% and other important driving factors, this stock has surged by 27.09% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
  • Net operating cash flow has significantly increased by 81.78% to -$2.88 million when compared to the same quarter last year. Despite an increase in cash flow of 81.78%, NORTHWEST PIPE CO is still growing at a significantly lower rate than the industry average of 257.82%.
  • NORTHWEST PIPE CO reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, NORTHWEST PIPE CO continued to lose money by earning -$0.16 versus -$0.79 in the prior year. This year, the market expects an improvement in earnings ($1.21 versus -$0.16).
  • The revenue growth came in higher than the industry average of 9.3%. Since the same quarter one year prior, revenues rose by 38.7%. Growth in the company's revenue appears to have helped boost the earnings per share.

Northwest Pipe Company manufactures and markets large-diameter, high-pressure steel pipeline systems for use in water infrastructure applications, primarily related to drinking water systems. The company has a P/E ratio of 209.9, below the average metals & mining industry P/E ratio of 229 and above the S&P 500 P/E ratio of 17.7. Northwest Pipe has a market cap of $234.5 million and is part of the basic materials sector and metals & mining industry. Shares are up 4.2% year to date as of the close of trading on Monday.

You can view the full Northwest Pipe Ratings Report or get investment ideas from our investment research center.
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