NEW YORK (TheStreet) -- Shares of Noranda Aluminum Holding Corp. (NOR) are gaining 5.25% to $4.01 on heavy volume in late-afternoon trading on Wednesday as some aluminum stocks received a boost from Alcoa Inc.'s (AA) strong 2014 second quarter earnings results.
Alcoa, the third largest aluminum producer in the world, reported earnings per share of 18 cents, beating the consensus estimate of 12 cents per share. Revenue was $5.84 billion, above the consensus estimate of $5.66 billion.
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Separately, TheStreet Ratings team rates NORANDA ALUMINUM HOLDING CP as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate NORANDA ALUMINUM HOLDING CP (NOR) a SELL. This is driven by multiple weaknesses, 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 deteriorating net income, generally high debt management risk, disappointing return on equity, poor profit margins and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Metals & Mining industry. The net income has significantly decreased by 2900.0% when compared to the same quarter one year ago, falling from $0.60 million to -$16.80 million.
- The debt-to-equity ratio is very high at 5.30 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, NOR maintains a poor quick ratio of 0.86, which illustrates the inability to avoid short-term cash problems.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Metals & Mining industry and the overall market, NORANDA ALUMINUM HOLDING CP's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for NORANDA ALUMINUM HOLDING CP is currently extremely low, coming in at 10.04%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -5.39% is significantly below that of the industry average.
- Net operating cash flow has significantly decreased to -$19.50 million or 828.57% 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: NOR Ratings Report