GrafTech International Inc. Stock Downgraded (GTI)

NEW YORK ( TheStreet) -- GrafTech International (NYSE: GTI) 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, attractive valuation levels and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 3.8%. Since the same quarter one year prior, revenues rose by 23.7%. 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.
  • GTI's debt-to-equity ratio is very low at 0.30 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.96 is somewhat weak and could be cause for future problems.
  • 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. When compared to other companies in the Electrical Equipment industry and the overall market, GRAFTECH INTERNATIONAL LTD's return on equity is below that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $47.30 million or 47.96% 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.
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GrafTech International Ltd. manufactures and sells synthetic and natural graphite and carbon based products. The company operates in two segments, Industrial Materials and Engineered Solutions. The company has a P/E ratio of 11.6, below the average industrial industry P/E ratio of 12.5 and below the S&P 500 P/E ratio of 17.7. GrafTech International has a market cap of $2.35 billion and is part of the industrial goods sector and industrial industry. Shares are down 11.1% year to date as of the close of trading on Monday.

You can view the full GrafTech International Ratings Report or get investment ideas from our investment research center.
-- Written by a member of TheStreet Ratings Staff
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