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NEW YORK (TheStreet) -- NL Industries (NL - Get Report) has been downgraded by TheStreet Ratings from Hold to Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate NL INDUSTRIES (NL) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Commercial Services & Supplies industry and the overall market, NL INDUSTRIES's return on equity significantly trails that of both the industry average and the S&P 500.
- NL's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 40.57%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Commercial Services & Supplies industry average, but is greater than that of the S&P 500. The net income increased by 138.4% when compared to the same quarter one year prior, rising from -$14.26 million to $5.47 million.
- NL INDUSTRIES 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, NL INDUSTRIES swung to a loss, reporting -$1.13 versus $1.16 in the prior year. This year, the market expects an improvement in earnings ($0.45 versus -$1.13).
- 35.37% is the gross profit margin for NL INDUSTRIES which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 20.38% is above that of the industry average.
- You can view the full analysis from the report here: NL Ratings Report