NEW YORK ( TheStreet) -- Gulf Island Fabrication (Nasdaq: GIFI) 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 increase in net income. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, poor profit margins and a generally disappointing performance in the stock itself. Highlights from the ratings report include:
- GIFI's very impressive revenue growth greatly exceeded the industry average of 15.7%. Since the same quarter one year prior, revenues leaped by 105.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- GULF ISLAND FABRICATION INC reported flat earnings per share in the most recent quarter. 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, GULF ISLAND FABRICATION INC swung to a loss, reporting -$0.13 versus $0.91 in the prior year. This year, the market expects an improvement in earnings ($2.24 versus -$0.13).
- The company, on the basis of net income growth from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Energy Equipment & Services industry average. The net income increased by 4.3% when compared to the same quarter one year prior, going from $1.69 million to $1.77 million.
- 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 Energy Equipment & Services industry and the overall market, GULF ISLAND FABRICATION INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for GULF ISLAND FABRICATION INC is currently extremely low, coming in at 12.10%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 2.00% significantly trails the industry average.
-- Written by a member of TheStreet Ratings Staff