NEW YORK ( TheStreet) -- Sealed Air Corporation (NYSE: SEE) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and generally poor debt management. Highlights from the ratings report include:
- SEE's very impressive revenue growth greatly exceeded the industry average of 25.1%. Since the same quarter one year prior, revenues leaped by 69.8%. 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.
- 35.00% is the gross profit margin for SEALED AIR CORP which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -2.40% trails the industry average.
- SEALED AIR CORP 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. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, SEALED AIR CORP reported lower earnings of $0.86 versus $1.45 in the prior year. This year, the market expects an improvement in earnings ($1.80 versus $0.86).
- 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. When compared to other companies in the Containers & Packaging industry and the overall market, SEALED AIR CORP's return on equity is below that of both the industry average and the S&P 500.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 27.06%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 189.65% compared to the year-earlier quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, SEE is still more expensive than most of the other companies in its industry.
-- Written by a member of TheStreet Ratings Staff