NEW YORK ( TheStreet) -- Olympic Steel (Nasdaq: ZEUS) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and robust revenue growth. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and poor profit margins.

Highlights from the ratings report include:
  • ZEUS has underperformed the S&P 500 Index, declining 9.68% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
  • The gross profit margin for OLYMPIC STEEL INC is rather low; currently it is at 20.20%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 2.70% significantly trails the industry average.
  • Despite currently having a low debt-to-equity ratio of 0.33, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Metals & Mining industry. The net income increased by 144.2% when compared to the same quarter one year prior, rising from $3.25 million to $7.95 million.
  • OLYMPIC STEEL INC 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, OLYMPIC STEEL INC turned its bottom line around by earning $0.20 versus -$5.63 in the prior year. This year, the market expects an improvement in earnings ($2.49 versus $0.20).

Olympic Steel, Inc. engages in the processing and distribution of carbon, coated, aluminum and stainless steel, flat-rolled sheet, and coil and plate products in the United States. The company has a P/E ratio of 23.3, above the average wholesale industry P/E ratio of 23.1 and above the S&P 500 P/E ratio of 17.7. Olympic has a market cap of $249 million and is part of the services sector and wholesale industry. Shares are down 21.3% year to date as of the close of trading on Monday.

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