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)
-- Commercial Metals Company (NYSE:
CMC) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, increase in stock price during the past year and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and weak operating cash flow.
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Highlights from the ratings report include:
- 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. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- CMC, with its decline in revenue, slightly underperformed the industry average of 1.7%. Since the same quarter one year prior, revenues fell by 11.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The gross profit margin for COMMERCIAL METALS is currently extremely low, coming in at 10.20%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.26% trails that of the industry average.
- Net operating cash flow has significantly decreased to -$42.44 million or 4639.14% 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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Commercial Metals Company engages in recycling, manufacturing, fabricating, and distributing steel and metal products, and related materials and services in the United States and internationally. The company has a P/E ratio of 14.7, below the S&P 500 P/E ratio of 17.7. Commercial has a market cap of $1.62 billion and is part of the basic materials sector and metals & mining industry. Shares are down 6.5% year to date as of the close of trading on Thursday.
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