NEW YORK ( TheStreet) -- Molycorp (NYSE: MCP) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year. Highlights from the ratings report include:
- MCP's very impressive revenue growth greatly exceeded the industry average of 10.2%. Since the same quarter one year prior, revenues leaped by 512.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- MCP's debt-to-equity ratio is very low at 0.24 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 2.74, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for MOLYCORP INC is rather high; currently it is at 51.20%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of 17.50% trails the industry average.
- MOLYCORP INC 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, MOLYCORP INC turned its bottom line around by earning $1.26 versus -$0.51 in the prior year. For the next year, the market is expecting a contraction of 22.6% in earnings ($0.98 versus $1.26).
- MCP's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 56.74%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
-- Written by a member of TheStreet RatingsStaff