NEW YORK ( TheStreet) -- United States Steel Corporation (NYSE: X) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its poor profit margins and generally disappointing historical performance in the stock itself. Highlights from the ratings report include:
- The gross profit margin for UNITED STATES STEEL CORP is currently extremely low, coming in at 12.20%. Regardless of X's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, X's net profit margin of 4.30% is significantly lower than the same period one year prior.
- X'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 49.56%, 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 company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Metals & Mining industry and the overall market, UNITED STATES STEEL CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- X's debt-to-equity ratio of 0.93 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.86 is weak.
- Net operating cash flow has significantly increased by 107.26% to $21.00 million when compared to the same quarter last year. In addition, UNITED STATES STEEL CORP has also vastly surpassed the industry average cash flow growth rate of 44.33%.