MYR Group Inc. Stock Downgraded (MYRG)

NEW YORK ( TheStreet) -- MYR Group (Nasdaq: MYRG) 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, growth in earnings per share and increase in net income. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • MYRG's very impressive revenue growth greatly exceeded the industry average of 14.6%. Since the same quarter one year prior, revenues leaped by 59.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • MYR GROUP INC has improved earnings per share by 38.1% 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 two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, MYR GROUP INC increased its bottom line by earning $0.87 versus $0.77 in the prior year. This year, the market expects an improvement in earnings ($1.35 versus $0.87).
  • MYRG has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.95 is somewhat weak and could be cause for future problems.
  • MYRG'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 30.28%, 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.
  • 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 Construction & Engineering industry and the overall market, MYR GROUP INC's return on equity is below that of both the industry average and the S&P 500.

MYR Group Inc., through its subsidiaries, provides electrical construction service in the continental United States. The company operates in two segments, Transmission and Distribution, and Commercial and Industrial. The company has a P/E ratio of 16.7, equal to the average materials & construction industry P/E ratio and below the S&P 500 P/E ratio of 17.7. MYR Group has a market cap of $325.6 million and is part of the industrial goods sector and materials & construction industry. Shares are down 18.9% year to date as of the close of trading on Thursday.

You can view the full MYR Group Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
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