NEW YORK ( TheStreet) -- R.R. Donnelley & Sons Company (Nasdaq: RRD) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins. Highlights from the ratings report include:
- RRD's revenue growth has slightly outpaced the industry average of 1.8%. Since the same quarter one year prior, revenues slightly increased by 0.5%. 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.
- Net operating cash flow has significantly increased by 74.83% to $474.50 million when compared to the same quarter last year. In addition, DONNELLEY (R R) & SONS CO has also vastly surpassed the industry average cash flow growth rate of -2.80%.
- DONNELLEY (R R) & SONS CO 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, DONNELLEY (R R) & SONS CO swung to a loss, reporting -$0.73 versus $1.05 in the prior year. This year, the market expects an improvement in earnings ($1.83 versus -$0.73).
- The gross profit margin for DONNELLEY (R R) & SONS CO is rather low; currently it is at 22.90%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -12.00% is significantly below that of the industry average.
- 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 Commercial Services & Supplies industry. The net income has significantly decreased by 1310.0% when compared to the same quarter one year ago, falling from $27.00 million to -$326.70 million.
-- Written by a member of TheStreet Ratings Staff