NEW YORK ( TheStreet) -- Gibraltar Industries (Nasdaq: ROCK) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and poor profit margins. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 7.0%. Since the same quarter one year prior, revenues rose by 29.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The current debt-to-equity ratio, 0.44, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.02, which illustrates the ability to avoid short-term cash problems.
- GIBRALTAR INDUSTRIES INC 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, GIBRALTAR INDUSTRIES INC reported poor results of -$2.47 versus -$1.37 in the prior year. This year, the market expects an improvement in earnings ($0.71 versus -$2.47).
- The gross profit margin for GIBRALTAR INDUSTRIES INC is rather low; currently it is at 22.80%. Regardless of ROCK'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 3.10% trails the industry average.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Building Products industry and the overall market on the basis of return on equity, GIBRALTAR INDUSTRIES INC underperformed against that of the industry average and is significantly less than that of the S&P 500.