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"We rate NORTHWEST PIPE CO (NWPX) 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 poor profit margins."
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Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth greatly exceeded the industry average of 9.4%. Since the same quarter one year prior, revenues rose by 48.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- NWPX's debt-to-equity ratio is very low at 0.19 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.49, which illustrates the ability to avoid short-term cash problems.
- NORTHWEST PIPE CO 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, NORTHWEST PIPE CO reported lower earnings of $0.24 versus $1.72 in the prior year. This year, the market expects an improvement in earnings ($1.22 versus $0.24).
- Net operating cash flow has significantly decreased to -$2.07 million or 125.24% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- 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 Construction & Engineering industry and the overall market, NORTHWEST PIPE CO's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: NWPX Ratings Report