NEW YORK ( TheStreet) -- Columbus McKinnon Corporation (Nasdaq: CMCO) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, generally disappointing historical performance in the stock itself and poor profit margins. Highlights from the ratings report include:
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Machinery industry and the overall market, COLUMBUS MCKINNON CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- CMCO's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 25.26%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- The gross profit margin for COLUMBUS MCKINNON CORP is currently lower than what is desirable, coming in at 28.10%. Regardless of CMCO's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 2.00% trails the industry average.
- COLUMBUS MCKINNON CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, COLUMBUS MCKINNON CORP reported poor results of -$1.92 versus -$0.40 in the prior year. This year, the market expects an improvement in earnings ($1.19 versus -$1.92).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Machinery industry. The net income increased by 484.9% when compared to the same quarter one year prior, rising from -$0.72 million to $2.78 million.