Timken Co Stock Downgraded (TKR)

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. NEW YORK ( TheStreet) -- Timken (NYSE: TKR) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and poor profit margins.

  • EXCLUSIVE OFFER: Jim Cramer's Protege, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.
Highlights from the ratings report include:
  • TIMKEN CO has improved earnings per share by 7.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, TIMKEN CO reported lower earnings of $2.19 versus $5.05 in the prior year. This year, the market expects an improvement in earnings ($2.51 versus $2.19).
  • TKR's debt-to-equity ratio is very low at 0.27 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 0.94 is somewhat weak and could be cause for future problems.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 4.7%. Since the same quarter one year prior, revenues slightly dropped by 0.3%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • 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 Machinery industry. The net income has decreased by 24.3% when compared to the same quarter one year ago, dropping from $82.80 million to $62.70 million.
The Timken Company engineers, manufactures, and markets mechanical components, bearings, and engineered steel bars and tubes worldwide. Timken has a market cap of $4.06 billion and is part of the industrial goods sector and industrial industry. You can view the full Timken Ratings Report or get investment ideas from our investment research center. STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

If you liked this article you might like

So Far, So Good for My Buyback/Dividend Growth Portfolio

Baker's Dozen Plus One Make Up My New Buyback/Dividend Growth Portfolio

Cramer: These Stocks Look Like 'Easy Pickings'

Cramer: The Best Performers Show No Signs of Letting Up