NEW YORK ( TheStreet) -- Mueller Water Products (NYSE: MWA) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share and increase in net income. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, generally poor debt management and poor profit margins.
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- Powered by its strong earnings growth of 300.00% and other important driving factors, this stock has surged by 55.33% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- MUELLER WATER PRODUCTS INC reported significant earnings per share improvement 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, MUELLER WATER PRODUCTS INC continued to lose money by earning -$0.15 versus -$0.29 in the prior year. This year, the market expects an improvement in earnings ($0.02 versus -$0.15).
- Net operating cash flow has remained constant at $12.20 million with no significant change when compared to the same quarter last year. Along with maintaining stable cash flow from operations, the firm exceeded the industry average cash flow growth rate of -37.33%.
- The debt-to-equity ratio is very high at 2.34 and currently higher than the industry average, implying that there is very poor management of debt levels within the company. Even though the debt-to-equity ratio is weak, MWA's quick ratio is somewhat strong at 1.41, demonstrating the ability to handle short-term liquidity needs.
- 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 Machinery industry and the overall market, MUELLER WATER PRODUCTS INC's return on equity significantly trails that of both the industry average and the S&P 500.
-- Written by a member of TheStreet Ratings Staff