NEW YORK ( TheStreet) -- Cytec Industries (NYSE: CYT) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, unimpressive growth in net income and poor profit margins. Highlights from the ratings report include:
- Despite its growing revenue, the company underperformed as compared with the industry average of 21.7%. Since the same quarter one year prior, revenues rose by 13.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The current debt-to-equity ratio, 0.34, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, CYT has a quick ratio of 1.59, which demonstrates the ability of the company to cover short-term liquidity needs.
- CYTEC INDUSTRIES INC's earnings per share declined by 29.4% 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, CYTEC INDUSTRIES INC turned its bottom line around by earning $2.84 versus -$0.06 in the prior year. This year, the market expects an improvement in earnings ($3.31 versus $2.84).
- Net operating cash flow has significantly decreased to $15.40 million or 82.15% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 37.68%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 29.41% compared to the year-earlier quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, CYT is still more expensive than most of the other companies in its industry.