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"We rate TENARIS SA (TS) 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, largely solid financial position with reasonable debt levels by most measures and increase in net income. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- TS's revenue growth trails the industry average of 15.9%. Since the same quarter one year prior, revenues slightly increased by 0.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- TS's debt-to-equity ratio is very low at 0.09 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, TS has a quick ratio of 1.62, which demonstrates the ability of the company to cover short-term liquidity needs.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Energy Equipment & Services industry average. The net income increased by 5.8% when compared to the same quarter one year prior, going from $300.16 million to $317.62 million.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Energy Equipment & Services industry and the overall market, TENARIS SA's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- Net operating cash flow has decreased to $659.45 million or 12.44% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- You can view the full analysis from the report here: TS Ratings Report
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