Editor's Note: 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. NEW YORK ( TheStreet) -- Metals USA Holdings (NYSE: MUSA) 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, attractive valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including poor profit margins, generally higher debt management risk and feeble growth in the company's earnings per share.
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- Compared to its closing price of one year ago, MUSA's share price has jumped by 38.89%, exceeding the performance of the broader market during that same time frame. 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.
- Despite the weak revenue results, MUSA has outperformed against the industry average of 21.6%. Since the same quarter one year prior, revenues slightly dropped by 1.7%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- The debt-to-equity ratio of 1.47 is relatively high when compared with the industry average, suggesting a need for better debt level management. Regardless of the company's weak debt-to-equity ratio, MUSA has managed to keep a strong quick ratio of 1.61, which demonstrates the ability to cover short-term cash needs.
- The gross profit margin for METALS USA HOLDINGS CORP is currently extremely low, coming in at 7.00%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 2.83% significantly trails the industry average.
-- Written by a member of TheStreet Ratings Staff