NEW YORK ( TheStreet) -- Joy Global (NYSE: JOY) 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, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and weak operating cash flow.
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- The revenue growth came in higher than the industry average of 16.4%. Since the same quarter one year prior, revenues rose by 45.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- JOY GLOBAL INC has improved earnings per share by 34.2% 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, JOY GLOBAL INC increased its bottom line by earning $5.92 versus $4.40 in the prior year. This year, the market expects an improvement in earnings ($7.25 versus $5.92).
- The debt-to-equity ratio is somewhat low, currently at 0.70, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.80 is somewhat weak and could be cause for future problems.
- Net operating cash flow has significantly decreased to $104.80 million or 59.19% when compared to the same quarter last year. Despite a decrease in cash flow of 59.19%, JOY GLOBAL INC is in line with the industry average cash flow growth rate of -68.43%.
- JOY'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 47.66%, 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. 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.
-- Written by a member of TheStreet Ratings Staff