NEW YORK (TheStreet) -- Shares of Brady Corp (BRC) are down 3.19% to $23.64 in early market trading after the company was downgraded to "market perform" from "outperform" at Wells Fargo (WFC) this morning.
Analysts at the firm cited the company's longer than expected restructuring.
Wells Fargo adjusted its price target range for Brady shares to a lower $23 to $25, from its previous $30 to $32.
Separately, TheStreet Ratings team rates BRADY CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate BRADY CORP (BRC) 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 impressive record of earnings per share growth, revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- BRADY CORP has improved earnings per share by 44.4% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, BRADY CORP continued to lose money by earning -$0.95 versus -$2.68 in the prior year. This year, the market expects an improvement in earnings ($1.80 versus -$0.95).
- Despite its growing revenue, the company underperformed as compared with the industry average of 4.1%. Since the same quarter one year prior, revenues slightly increased by 2.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The current debt-to-equity ratio, 0.36, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.89 is somewhat weak and could be cause for future problems.
- BRC has underperformed the S&P 500 Index, declining 23.33% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- Net operating cash flow has significantly decreased to $17.58 million or 67.36% 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: BRC Ratings Report
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