Why Companhia Siderugica Nacion (SID) Stock Is a 'Hold'

NEW YORK (TheStreet) -- TheStreet Ratings team reiterated its "hold" rating for Companhia Siderugica Nacion (SID) Monday with a ratings score of C.

Shares of Companhia Siderugica Nacion were gaining 4.6% to $4.66.

More than 8.2 million shares of Companhia Siderugica Nacion were sold as of 3:20 p.m., more than double the daily average trading volumes of about 4 million shares a day.

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TheStreet Ratings team rates COMPANHIA SIDERURGICA NACION as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate COMPANHIA SIDERURGICA NACION (SID) 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, solid stock price performance and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet."

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

  • SID's revenue growth has slightly outpaced the industry average of 4.5%. Since the same quarter one year prior, revenues slightly increased by 7.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Powered by its strong earnings growth of 100.00% and other important driving factors, this stock has surged by 66.28% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • 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 on the basis of return on equity, COMPANHIA SIDERURGICA NACION has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • 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 81.5% when compared to the same quarter one year prior, rising from $13.52 million to $24.54 million.
  • The debt-to-equity ratio is very high at 3.81 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, SID has managed to keep a strong quick ratio of 1.88, which demonstrates the ability to cover short-term cash needs.
  • You can view the full analysis from the report here: SID Ratings Report

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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.

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