Tenaris SA Stock Upgraded (TS)

NEW YORK ( TheStreet) -- Tenaris (NYSE: TS) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its increase in net income, robust revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and growth in earnings per share. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the Energy Equipment & Services industry average, but is less than that of the S&P 500. The net income increased by 6.6% when compared to the same quarter one year prior, going from $304.81 million to $324.99 million.
  • TS's revenue growth trails the industry average of 41.7%. Since the same quarter one year prior, revenues rose by 23.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • TS's debt-to-equity ratio is very low at 0.11 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.22, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has significantly increased by 173.70% to $336.27 million when compared to the same quarter last year. In addition, TENARIS SA has also vastly surpassed the industry average cash flow growth rate of 69.55%.
  • TENARIS SA has improved earnings per share by 5.8% 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, TENARIS SA reported lower earnings of $1.91 versus $1.99 in the prior year. This year, the market expects an improvement in earnings ($2.23 versus $1.91).

Tenaris S.A., through its subsidiaries, engages in the manufacture and sale of steel pipe products. The company has a P/E ratio of 19.7, above the average metals & mining industry P/E ratio of 17.6 and above the S&P 500 P/E ratio of 17.7. Tenaris has a market cap of $22.01 billion and is part of the basic materials sector and metals & mining industry. Shares are down 23.6% year to date as of the close of trading on Monday.

You can view the full Tenaris Ratings Report or get investment ideas from our investment research center.

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