MFC Industrial Ltd Stock Downgraded (MIL)

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) -- MFC Industrial (NYSE: MIL) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and weak operating cash flow.

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Highlights from the ratings report include:
  • The current debt-to-equity ratio, 0.44, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.10, which illustrates the ability to avoid short-term cash problems.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. When compared to other companies in the Trading Companies & Distributors industry and the overall market, MFC INDUSTRIAL LTD's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Trading Companies & Distributors industry. The net income has significantly decreased by 399.6% when compared to the same quarter one year ago, falling from -$9.41 million to -$47.01 million.
  • Net operating cash flow has significantly decreased to -$127.71 million or 704.95% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
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MFC Industrial Ltd., a commodity supply chain company, engages in sourcing and delivering commodities and materials to clients worldwide. It operates through three segments: Commodities and Resources, Merchant Banking, and Other. The company has a P/E ratio of 2.3, below the S&P 500 P/E ratio of 17.7. MFC Industrial has a market cap of $520.4 million and is part of the basic materials sector and metals & mining industry. Shares are down 1.6% year to date as of the close of trading on Monday.

You can view the full MFC Industrial Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

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