Why American Vanguard (AVD) Stock Closed Lower Friday

NEW YORK (TheStreet) -- Shares of American Vanguard Corp. (AVD) closed lower -11.60% to $15.47 on Friday as a result of its 2014 first quarter earnings.

The company, which develops and markets chemical products for agricultural and commercial uses, reported net sales of $81.1 million versus $121.5 million from the same period last year.

American Vanguard reported net income was $2.2 million compared with $16.9 million from the 2013 first quarter.

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First quarter earnings per diluted share was 7 cents for 2014 compared to 59 cents per diluted share from the year ago quarter.

TheStreet Ratings team rates AMERICAN VANGUARD CORP as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate AMERICAN VANGUARD CORP (AVD) 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 reasonable valuation levels, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • 47.67% is the gross profit margin for AMERICAN VANGUARD CORP which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, AVD's net profit margin of 0.36% significantly trails the industry average.
  • AVD's debt-to-equity ratio is very low at 0.20 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.83 is somewhat weak and could be cause for future problems.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Chemicals industry and the overall market, AMERICAN VANGUARD CORP's return on equity is below that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$13.41 million or 149.09% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • You can view the full analysis from the report here: AVD Ratings Report
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