Will This Ratings Downgrade Hurt Chemtura (CHMT) Stock Today?

NEW YORK (TheStreet) -- Chemtura  (CHMT) was downgraded to "hold" from "buy" at Keybanc on Thursday.

The firm said it lowered its rating on the global developer of performance-driven engineered specialty chemicals as it believes Chemtura's industrial engineering products will continue to drag growth.

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Separately, TheStreet Ratings team rates CHEMTURA CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate CHEMTURA CORP (CHMT) 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 compelling growth in net income, revenue growth, good cash flow from operations, growth in earnings per share and largely solid financial position with reasonable debt levels by most measures. 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:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Chemicals industry. The net income increased by 141.9% when compared to the same quarter one year prior, rising from -$93.00 million to $39.00 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 7.6%. Since the same quarter one year prior, revenues slightly increased by 3.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Net operating cash flow has significantly increased by 1000.00% to $18.00 million when compared to the same quarter last year. In addition, CHEMTURA CORP has also vastly surpassed the industry average cash flow growth rate of -14.08%.
  • CHEMTURA CORP reported significant earnings per share improvement 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, CHEMTURA CORP swung to a loss, reporting -$0.23 versus $1.03 in the prior year. This year, the market expects an improvement in earnings ($1.10 versus -$0.23).
  • CHMT's debt-to-equity ratio of 0.88 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.21 is sturdy.
  • You can view the full analysis from the report here: CHMT Ratings Report

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