NEW YORK ( TheStreet) -- Deltic Timber Corporation (NYSE: DEL) 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, notable return on equity and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, premium valuation and poor profit margins. Highlights from the ratings report include:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Paper & Forest Products industry. The net income has significantly decreased by 95.9% when compared to the same quarter one year ago, falling from $2.25 million to $0.09 million.
- Net operating cash flow has significantly decreased to -$1.24 million or 128.34% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- DELTIC TIMBER CORP has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past two years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, DELTIC TIMBER CORP increased its bottom line by earning $0.99 versus $0.31 in the prior year.
- The current debt-to-equity ratio, 0.31, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that DEL's debt-to-equity ratio is low, the quick ratio, which is currently 0.68, displays a potential problem in covering short-term cash needs.