Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link. NEW YORK ( TheStreet) -- Blount International (NYSE: BLT) has been downgraded by TheStreet Ratings from buy to hold. Among the primary strengths of the company is its respectable return on equity which we feel is likely to continue. At the same time, however, we also find weaknesses including feeble growth in the company's earnings per share, poor profit margins and a generally disappointing performance in the stock itself.
- EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.
- Despite the weak revenue results, BLT has outperformed against the industry average of 17.8%. Since the same quarter one year prior, revenues slightly dropped by 7.8%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. When compared to other companies in the Machinery industry and the overall market, BLOUNT INTL INC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
- The change in net income from the same quarter one year ago has exceeded that of the Machinery industry average, but is less than that of the S&P 500. The net income has significantly decreased by 28.8% when compared to the same quarter one year ago, falling from $13.10 million to $9.33 million.
- BLOUNT INTL INC's earnings per share declined by 26.9% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, BLOUNT INTL INC reported lower earnings of $0.79 versus $1.00 in the prior year. For the next year, the market is expecting a contraction of 10.1% in earnings ($0.71 versus $0.79).
- The gross profit margin for BLOUNT INTL INC is currently lower than what is desirable, coming in at 27.52%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 4.23% trails that of the industry average.