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) -- Greenhill (NYSE: GHL) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, solid stock price performance and notable return on equity. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, poor profit margins and feeble growth in the company's earnings per share.
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- Net operating cash flow has significantly increased by 159.05% to $16.18 million when compared to the same quarter last year. In addition, GREENHILL & CO INC has also vastly surpassed the industry average cash flow growth rate of -120.57%.
- Compared to its closing price of one year ago, GHL's share price has jumped by 53.63%, exceeding the performance of the broader market during that same time frame. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 5.0%. Since the same quarter one year prior, revenues slightly dropped by 3.7%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Capital Markets industry average. The net income has decreased by 15.6% when compared to the same quarter one year ago, dropping from $16.14 million to $13.62 million.
- The gross profit margin for GREENHILL & CO INC is currently lower than what is desirable, coming in at 29.80%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 17.10% trails that of the industry average.
-- Written by a member of TheStreet Ratings Staff