Hillenbrand Inc. Stock Downgraded (HI)

NEW YORK ( TheStreet) -- Hillenbrand (NYSE: HI) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels 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, unimpressive growth in net income and generally poor debt management.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 3.3%. Since the same quarter one year prior, revenues rose by 12.9%. 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.
  • 44.70% is the gross profit margin for HILLENBRAND INC which we consider to be strong. Regardless of HI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 10.60% trails the industry average.
  • 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. Compared to other companies in the Diversified Consumer Services industry and the overall market on the basis of return on equity, HILLENBRAND INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • Looking at the price performance of HI's shares over the past 12 months, there is not much good news to report: the stock is down 25.65%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.

Hillenbrand, Inc. designs, manufactures, distributes, and sells funeral service products to licensed funeral directors operating licensed funeral homes. The company has a P/E ratio of 10.8, above the average industrial industry P/E ratio of 10.6 and below the S&P 500 P/E ratio of 17.7. Hillenbrand has a market cap of $1.12 billion and is part of the industrial goods sector and industrial industry. Shares are down 20% year to date as of the close of trading on Wednesday.

You can view the full Hillenbrand 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.

null

More from Markets

Oil Falls Sharply After Saudi Arabia, Russia Suggest Production Cut Easing

Oil Falls Sharply After Saudi Arabia, Russia Suggest Production Cut Easing

Netflix Ready to Surpass Disney as America's Most Valuable Media Company

Netflix Ready to Surpass Disney as America's Most Valuable Media Company

North Korea, Apple, GPDR and Gap - 5 Things You Must Know

North Korea, Apple, GPDR and Gap - 5 Things You Must Know

Italian Bonds Slump as Government Mulls Anti-Euro Finance Minister

Italian Bonds Slump as Government Mulls Anti-Euro Finance Minister

Global Stocks Hold Gains as North Korea Response on Talks Soothes Nerves

Global Stocks Hold Gains as North Korea Response on Talks Soothes Nerves