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) -- Chemtura Corporation (NYSE: CHMT) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity and poor profit margins.
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- CHEMTURA CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, CHEMTURA CORP reported lower earnings of $1.03 versus $1.19 in the prior year. For the next year, the market is expecting a contraction of 36.9% in earnings ($0.65 versus $1.03).
- 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 Chemicals industry. The net income has significantly decreased by 544.4% when compared to the same quarter one year ago, falling from $9.00 million to -$40.00 million.
- 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. Compared to other companies in the Chemicals industry and the overall market, CHEMTURA CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for CHEMTURA CORP is rather low; currently it is at 21.79%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -7.02% is significantly below that of the industry average.
- CHMT's debt-to-equity ratio of 0.90 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.41 is sturdy.