Why Tenaris (TS) Stock Is Advancing Today

NEW YORK (TheStreet) -- Shares of Tenaris SA (TS) are higher by 2.26% to $45.64 in mid-afternoon trading on Thursday, thanks to a ratings upgrade to "overweight" from "equal weight" at Morgan Stanley (MS) , Reuters reports.

The firm said it raised its rating on the steel pipe manufacturer and distributor as it believes the company "offers an out-of-consensus play on increased U.S. shale activity and Latin America growth driven by energy reforms in Mexico and a shale boom in Argentina," Reuters noted.

Morgan Stanley increased its price target on Tenaris to $60 from $47.STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Separately, TheStreet Ratings team rates TENARIS SA as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate TENARIS SA (TS) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

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

  • TS's debt-to-equity ratio is very low at 0.08 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, TS has a quick ratio of 1.75, which demonstrates the ability of the company to cover short-term liquidity needs.
  • 40.21% is the gross profit margin for TENARIS SA which we consider to be strong. Regardless of TS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, TS's net profit margin of 15.32% compares favorably to the industry average.
  • TENARIS SA' earnings per share from the most recent quarter came in slightly below the year earlier quarter. 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, TENARIS SA reported lower earnings of $2.62 versus $2.88 in the prior year. This year, the market expects an improvement in earnings ($2.73 versus $2.62).
  • TS, with its decline in revenue, underperformed when compared the industry average of 20.4%. Since the same quarter one year prior, revenues slightly dropped by 6.0%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • In its most recent trading session, TS has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • You can view the full analysis from the report here: TS Ratings Report

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