Stoneridge Inc Stock Downgraded (SRI)

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) -- Stoneridge (NYSE: SRI) has been downgraded by TheStreet Ratings from buy to hold. Among the primary strengths of the company is its generally strong cash flow from operations. At the same time, however, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity.

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Highlights from the ratings report include:
  • Net operating cash flow has significantly increased by 137.99% to $9.13 million when compared to the same quarter last year. In addition, STONERIDGE INC has also vastly surpassed the industry average cash flow growth rate of -22.25%.
  • STONERIDGE INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, STONERIDGE INC increased its bottom line by earning $0.52 versus $0.21 in the prior year. This year, the market expects an improvement in earnings ($0.65 versus $0.52).
  • SRI, with its decline in revenue, underperformed when compared the industry average of 8.8%. Since the same quarter one year prior, revenues slightly dropped by 4.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • 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 Auto Components industry and the overall market, STONERIDGE INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for STONERIDGE INC is currently lower than what is desirable, coming in at 29.79%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -13.50% is significantly below that of the industry average.

Stoneridge, Inc. designs and manufactures electrical and electronic components, modules, and systems for the commercial vehicle, automotive, agricultural, motorcycle, and off-highway vehicle markets in North America, South America, and Europe. Stoneridge has a market cap of $310.7 million and is part of the consumer goods sector and automotive industry. Shares are down 13% year to date as of the close of trading on Wednesday.

You can view the full Stoneridge Ratings Report or get investment ideas from our investment research center.

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