NEW YORK ( TheStreet) -- Ingersoll-Rand (NYSE: IR) has been downgraded by TheStreet Ratings from buy to hold. Among the primary strengths of the company is its revenue growth. At the same time, however, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and poor profit margins. Highlights from the ratings report include:
- The revenue growth significantly trails the industry average of 40.6%. Since the same quarter one year prior, revenues slightly increased by 5.3%. 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.
- INGERSOLL-RAND PLC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, INGERSOLL-RAND PLC increased its bottom line by earning $2.24 versus $1.47 in the prior year. This year, the market expects an improvement in earnings ($2.73 versus $2.24).
- The gross profit margin for INGERSOLL-RAND PLC is currently lower than what is desirable, coming in at 29.40%. Regardless of IR'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 2.20% trails the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Machinery industry. The net income has significantly decreased by 62.9% when compared to the same quarter one year ago, falling from $232.20 million to $86.20 million.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 28.76%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 65.00% compared to the year-earlier quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.