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"We rate MRC GLOBAL INC (MRC) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The gross profit margin for MRC GLOBAL INC is rather low; currently it is at 18.78%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 3.09% trails that of the industry average.
- Net operating cash flow has significantly decreased to -$16.78 million or 128.21% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- MRC's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 51.14%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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 return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Trading Companies & Distributors industry and the overall market, MRC GLOBAL INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- MRC's debt-to-equity ratio of 0.99 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.28 is sturdy.
- You can view the full analysis from the report here: MRC Ratings Report
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