Story updated at 10:25 a.m. to reflect market activity.
USG was gaining 2.4% to $36.01 in morning trading.
"Based on a sample of wallboard prices at the retail channel, USG is seeing less pricing compared to the distributor channel, which is expected given the purchasing power of the home centers," analyst Philip Ng wrote. "That said, when factoring all the distribution channels, we believe USG's wallboard prices are up 14% in 2014, which is in-line to modestly better than expectations."
Separately, TheStreet Ratings team rates USG CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate USG CORP (USG) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- USG's revenue growth has slightly outpaced the industry average of 3.2%. Since the same quarter one year prior, revenues rose by 12.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- USG CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, USG CORP turned its bottom line around by earning $0.44 versus -$1.71 in the prior year. This year, the market expects an improvement in earnings ($1.85 versus $0.44).
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
- The gross profit margin for USG CORP is rather low; currently it is at 20.87%. Regardless of USG's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -0.32% trails the industry average.
- The debt-to-equity ratio is very high at 3.69 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Regardless of the company's weak debt-to-equity ratio, USG has managed to keep a strong quick ratio of 2.23, which demonstrates the ability to cover short-term cash needs.
- You can view the full analysis from the report here: USG Ratings Report