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"We rate TERNIUM SA -ADR (TX) 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 revenue growth, growth in earnings per share and increase in net income. However, as a counter to these strengths, we also find weaknesses including poor profit margins, weak operating cash flow and a generally disappointing performance in the stock itself."
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Highlights from the analysis by TheStreet Ratings Team goes as follows:
- TX's revenue growth has slightly outpaced the industry average of 3.4%. Since the same quarter one year prior, revenues slightly increased by 3.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- TERNIUM SA -ADR has improved earnings per share by 14.0% 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, TERNIUM SA -ADR increased its bottom line by earning $2.32 versus $0.72 in the prior year. This year, the market expects an improvement in earnings ($2.77 versus $2.32).
- The current debt-to-equity ratio, 0.39, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that TX's debt-to-equity ratio is low, the quick ratio, which is currently 0.67, displays a potential problem in covering short-term cash needs.
- Net operating cash flow has declined marginally to $287.82 million or 0.74% when compared to the same quarter last year. Despite a decrease in cash flow of 0.74%, TERNIUM SA -ADR is still significantly exceeding the industry average of -55.91%.
- The gross profit margin for TERNIUM SA -ADR is rather low; currently it is at 24.98%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 5.03% significantly trails the industry average.
- You can view the full analysis from the report here: TX Ratings Report