NEW YORK ( TheStreet) -- Dresser-Rand Group (NYSE: DRC) 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, increase in net income and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including generally poor debt management, poor profit margins and a generally disappointing performance in the stock itself.
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- DRC's very impressive revenue growth greatly exceeded the industry average of 14.1%. Since the same quarter one year prior, revenues leaped by 86.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Energy Equipment & Services industry. The net income increased by 5800.0% when compared to the same quarter one year prior, rising from $0.40 million to $23.60 million.
- DRESSER-RAND GROUP INC has shown improvement in its earnings for its most recently reported quarter when compared with the same quarter a year earlier. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, DRESSER-RAND GROUP INC reported lower earnings of $1.55 versus $1.80 in the prior year. This year, the market expects an improvement in earnings ($2.84 versus $1.55).
- The debt-to-equity ratio of 1.15 is relatively high when compared with the industry average, suggesting a need for better debt level management. To add to this, DRC has a quick ratio of 0.63, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- The gross profit margin for DRESSER-RAND GROUP INC is currently lower than what is desirable, coming in at 25.00%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 3.60% trails that of the industry average.
-- Written by a member of TheStreet Ratings Staff