NEW YORK ( TheStreet) -- OM Group (NYSE: OMG) 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 revenue growth. 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:
- OM GROUP 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, OM GROUP INC turned its bottom line around by earning $2.70 versus -$0.64 in the prior year. This year, the market expects an improvement in earnings ($3.24 versus $2.70).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Chemicals industry. The net income increased by 92.5% when compared to the same quarter one year prior, rising from $12.79 million to $24.62 million.
- Net operating cash flow has increased to $50.97 million or 11.64% when compared to the same quarter last year. Despite an increase in cash flow, OM GROUP INC's cash flow growth rate is still lower than the industry average growth rate of 31.59%.
- 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. In comparison to the other companies in the Chemicals industry and the overall market, OM GROUP INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- The gross profit margin for OM GROUP INC is currently lower than what is desirable, coming in at 26.50%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 7.50% trails that of the industry average.