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"We rate MFRI INC (MFRI) 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 largely solid financial position with reasonable debt levels by most measures, attractive valuation levels and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and weak operating cash flow."
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Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The current debt-to-equity ratio, 0.45, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, MFRI has a quick ratio of 1.55, which demonstrates the ability of the company to cover short-term liquidity needs.
- 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 Machinery industry and the overall market on the basis of return on equity, MFRI INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- The gross profit margin for MFRI INC is rather low; currently it is at 22.51%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 2.55% trails that of the industry average.
- Net operating cash flow has significantly decreased to -$1.45 million or 345.84% 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: MFRI Ratings Report
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