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NEW YORK (TheStreet) -- Freightcar America (RAIL) 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 FREIGHTCAR AMERICA INC (RAIL) 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 robust revenue growth, largely solid financial position with reasonable debt levels by most measures and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, poor profit margins and weak operating cash flow."
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Highlights from the analysis by TheStreet Ratings Team goes as follows:
- RAIL's very impressive revenue growth greatly exceeded the industry average of 3.1%. Since the same quarter one year prior, revenues leaped by 150.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
- RAIL 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 the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.09, which illustrates the ability to avoid short-term cash problems.
- FREIGHTCAR AMERICA INC 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, FREIGHTCAR AMERICA INC swung to a loss, reporting -$1.62 versus $1.59 in the prior year. This year, the market expects an improvement in earnings ($0.56 versus -$1.62).
- The gross profit margin for FREIGHTCAR AMERICA INC is currently extremely low, coming in at 11.21%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 3.38% trails that of the industry average.
- Net operating cash flow has significantly decreased to -$18.01 million or 572.16% 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: RAIL Ratings Report
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