NEW YORK (TheStreet) -- Shares of Molycorp Inc. (MCP) are down -5.47% to $2.94 in heavy trading today as the company continues to suffer fallout from its poor first quarter earnings results last week and analyst downgrades, including JPMorgan's (JPM) "underweight" from "neutral" rating.
As rare earth prices have declined, the company said it produced less material than expected at its California-based Mountain Pass facility, the result of a production interruptions.
The company reported a net loss of 29 cents per share. The consensus estimates were for 21 cents. Revenues declined 18% to $118.5 million, missing analysts' expectations of $144.4 million
TheStreet Ratings team rates MOLYCORP INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate MOLYCORP INC (MCP) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its weak operating cash flow, generally disappointing historical performance in the stock itself and generally high debt management risk."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has significantly decreased to -$64.34 million or 51.57% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, MOLYCORP INC has marginally lower results.
- The debt-to-equity ratio of 1.02 is relatively high when compared with the industry average, suggesting a need for better debt level management. Regardless of the company's weak debt-to-equity ratio, MCP has managed to keep a strong quick ratio of 2.46, which demonstrates the ability to cover short-term cash needs.
- MCP's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 34.46%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Metals & Mining industry average, but is greater than that of the S&P 500. The net income increased by 50.3% when compared to the same quarter one year prior, rising from -$391.19 million to -$194.31 million.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Metals & Mining industry and the overall market, MOLYCORP INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: MCP Ratings Report