NEW YORK ( TheStreet) -- Schnitzer Steel Industries (Nasdaq: SCHN) 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, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, 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 2.4%. Since the same quarter one year prior, revenues rose by 22.8%. 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.
- The current debt-to-equity ratio, 0.37, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.48, which illustrates the ability to avoid short-term cash 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 Metals & Mining industry and the overall market, SCHNITZER STEEL INDS's return on equity is below that of both the industry average and the S&P 500.
- The gross profit margin for SCHNITZER STEEL INDS is currently extremely low, coming in at 10.20%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.10% significantly trails the industry average.
-- Written by a member of TheStreet Ratings Staff