NEW YORK ( TheStreet) -- Northwest Pipe Company (Nasdaq: NWPX) 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, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, generally poor debt management and poor profit margins. Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 8.8%. Since the same quarter one year prior, revenues rose by 49.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- NORTHWEST PIPE CO 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 year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, NORTHWEST PIPE CO continued to lose money by earning -$0.16 versus -$0.79 in the prior year. This year, the market expects an improvement in earnings ($1.73 versus -$0.16).
- Despite currently having a low debt-to-equity ratio of 0.39, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that NWPX's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.69 is low and demonstrates weak liquidity.
- NWPX has underperformed the S&P 500 Index, declining 7.97% from its price level of one year ago. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
-- Written by a member of TheStreet Ratings Staff