NEW YORK ( TheStreet) -- Metals USA Holdings (NYSE: MUSA) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and robust revenue growth. However, as a counter to these strengths, we also find weaknesses including poor profit margins, a generally disappointing performance in the stock itself and generally poor debt management. Highlights from the ratings report include:
- METALS USA HOLDINGS CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, METALS USA HOLDINGS CORP increased its bottom line by earning $1.72 versus $0.31 in the prior year. This year, the market expects an improvement in earnings ($1.97 versus $1.72).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Metals & Mining industry. The net income increased by 351.6% when compared to the same quarter one year prior, rising from $3.10 million to $14.00 million.
- Currently the debt-to-equity ratio of 1.82 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Regardless of the company's weak debt-to-equity ratio, MUSA has managed to keep a strong quick ratio of 1.59, which demonstrates the ability to cover short-term cash needs.
- The gross profit margin for METALS USA HOLDINGS CORP is currently extremely low, coming in at 7.20%. Regardless of MUSA's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, MUSA's net profit margin of 3.10% is significantly lower than the same period one year prior.