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NEW YORK (TheStreet) -- Globe Specialty Metals (GSM) has been upgraded by TheStreet Ratings from Hold to Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate GLOBE SPECIALTY METALS INC (GSM) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
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Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 0.6%. Since the same quarter one year prior, revenues rose by 13.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The current debt-to-equity ratio, 0.32, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, GSM has a quick ratio of 2.28, which demonstrates the ability of the company to cover short-term liquidity needs.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Metals & Mining industry and the overall market on the basis of return on equity, GLOBE SPECIALTY METALS INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- Compared to its closing price of one year ago, GSM's share price has jumped by 38.04%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- GLOBE SPECIALTY METALS INC's earnings per share declined by 38.5% 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, GLOBE SPECIALTY METALS INC turned its bottom line around by earning $0.19 versus -$0.28 in the prior year. This year, the market expects an improvement in earnings ($0.96 versus $0.19).
- You can view the full analysis from the report here: GSM Ratings Report