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) -- Louisiana-Pacific (NYSE: LPX) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity. 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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- LPX's revenue growth has slightly outpaced the industry average of 1.0%. Since the same quarter one year prior, revenues slightly increased by 4.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The debt-to-equity ratio is somewhat low, currently at 0.62, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with this, the company maintains a quick ratio of 4.42, which clearly demonstrates the ability to cover short-term cash needs.
- LOUISIANA-PACIFIC 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. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, LOUISIANA-PACIFIC CORP increased its bottom line by earning $1.22 versus $0.20 in the prior year. This year, the market expects an improvement in earnings ($1.24 versus $1.22).
- The gross profit margin for LOUISIANA-PACIFIC CORP is currently extremely low, coming in at 13.45%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -4.25% is significantly below that of the industry average.
- Net operating cash flow has significantly decreased to $19.70 million or 68.73% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.