NEW YORK ( TheStreet) -- Harsco Corporation (NYSE: HSC) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself. Highlights from the ratings report include:
- 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 80.9% when compared to the same quarter one year ago, falling from -$51.12 million to -$92.47 million. **(Recently quarterly net income totals reflect the effects of a restructuring charge)
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Machinery industry and the overall market, HARSCO CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for HARSCO CORP is rather low; currently it is at 21.60%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -11.70% is significantly below that of the industry average.
- Net operating cash flow has decreased to $108.67 million or 34.31% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly 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 34.77%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 80.95% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.