Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link. TheStreet Ratings quantitative algorithm evaluates over 4,300 stocks on a daily basis by 32 different data factors and assigns a unique buy, sell, or hold recommendation on each stock. Click here to learn more.
"We rate UNITED-GUARDIAN INC (UG) 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 largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- UG has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 13.49, which clearly demonstrates the ability to cover short-term cash needs.
- Net operating cash flow has significantly increased by 1576.00% to $0.42 million when compared to the same quarter last year. In addition, UNITED-GUARDIAN INC has also vastly surpassed the industry average cash flow growth rate of 23.35%.
- The gross profit margin for UNITED-GUARDIAN INC is rather high; currently it is at 50.08%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, UG's net profit margin of 16.33% compares favorably to the industry average.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 31.19%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 67.85% compared to the year-earlier 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 change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Personal Products industry. The net income has significantly decreased by 67.8% when compared to the same quarter one year ago, falling from $1.28 million to $0.41 million.