Will Con-Way (CNW) Stock React Positively To This Ratings Upgrade?

NEW YORK (TheStreet) -- Con-Way Inc. (CNW) was upgraded to "buy" from "hold" at Wunderlich Securities on Friday.

The firm said it raised its rating on the company, which provides transportation, logistics, and supply-chain management services to retail, manufacturing, and industrial customers, based on improving demands, which will help to boost margins.

Wunderlich increased its price target on the stock to $57 from $44.

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Separately, TheStreet Ratings team rates CON-WAY INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate CON-WAY INC (CNW) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. 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 solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

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

  • Despite its growing revenue, the company underperformed as compared with the industry average of 9.3%. Since the same quarter one year prior, revenues slightly increased by 2.4%. 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 0.66, 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 the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.46, which illustrates the ability to avoid short-term cash problems.
  • Compared to its closing price of one year ago, CNW's share price has jumped by 25.86%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • CON-WAY INC's earnings per share declined by 12.0% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, CON-WAY INC reported lower earnings of $1.73 versus $1.86 in the prior year. This year, the market expects an improvement in earnings ($2.10 versus $1.73).
  • The gross profit margin for CON-WAY INC is currently extremely low, coming in at 6.77%. Regardless of CNW's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, CNW's net profit margin of 0.94% is significantly lower than the industry average.
  • You can view the full analysis from the report here: CNW Ratings Report
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