Nordion Inc. Stock Downgraded (NDZ)

NEW YORK ( TheStreet) -- Nordion (NYSE: NDZ) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and unimpressive growth in net income.

Highlights from the ratings report include:
  • NDZ's debt-to-equity ratio is very low at 0.17 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, NDZ has a quick ratio of 1.74, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has significantly increased by 164.87% to $9.39 million when compared to the same quarter last year. In addition, NORDION INC has also vastly surpassed the industry average cash flow growth rate of 28.62%.
  • The gross profit margin for NORDION INC is rather high; currently it is at 52.00%. Regardless of NDZ's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NDZ's net profit margin of -1.70% significantly underperformed when compared to the industry average.
  • The share price of NORDION INC has not done very well: it is down 21.98% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. 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.
  • 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 Life Sciences Tools & Services industry. The net income has significantly decreased by 104.1% when compared to the same quarter one year ago, falling from $21.55 million to -$0.89 million.
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Nordion Inc., a health science company, provides various products and services used for the prevention, diagnosis, and treatment of diseases worldwide. The company has a P/E ratio of 32.9, above the S&P 500 P/E ratio of 17.7. Nordion has a market cap of $560.9 million and is part of the health care sector and health services industry. Shares are up 8.3% year to date as of the close of trading on Wednesday.

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