NEW YORK ( TheStreet) -- Vulcan Materials Company (NYSE: VMC) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself. Highlights from the ratings report include:
- The gross profit margin for VULCAN MATERIALS CO is rather low; currently it is at 20.00%. Regardless of VMC's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, VMC's net profit margin of -9.70% significantly underperformed when compared to the industry average.
- Net operating cash flow has decreased to $29.14 million or 33.83% when compared to the same quarter last year. Despite a decrease in cash flow VULCAN MATERIALS CO is still fairing well by exceeding its industry average cash flow growth rate of -52.43%.
- VMC has underperformed the S&P 500 Index, declining 12.09% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Construction Materials industry average, but is greater than that of the S&P 500. The net income increased by 4.9% when compared to the same quarter one year prior, going from -$54.73 million to -$52.05 million.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Construction Materials industry and the overall market on the basis of return on equity, VULCAN MATERIALS CO underperformed against that of the industry average and is significantly less than that of the S&P 500.
-- Written by a member of TheStreet Ratings Staff