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NEW YORK (TheStreet) -- Quanex Building Products (NX) has been downgraded by TheStreet Ratings from Buy to Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate QUANEX BUILDING PRODUCTS (NX) 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 impressive record of earnings per share growth, compelling growth in net income and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and poor profit margins."
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Highlights from the analysis by TheStreet Ratings Team goes as follows:
- NX's debt-to-equity ratio is very low at 0.00 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, NX has a quick ratio of 2.36, which demonstrates the ability of the company to cover short-term liquidity needs.
- QUANEX BUILDING PRODUCTS reported significant earnings per share improvement 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 two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, QUANEX BUILDING PRODUCTS turned its bottom line around by earning $0.22 versus -$0.22 in the prior year. This year, the market expects an improvement in earnings ($0.55 versus $0.22).
- The revenue fell significantly faster than the industry average of 2.4%. Since the same quarter one year prior, revenues fell by 40.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- The gross profit margin for QUANEX BUILDING PRODUCTS is rather low; currently it is at 21.23%. Regardless of NX's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 3.02% trails the industry average.
- Net operating cash flow has significantly decreased to $11.02 million or 70.16% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: NX Ratings Report