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NEW YORK (TheStreet) -- Babcock And Wilcox Co. (BWC) 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:
TheStreet Ratings team rates BABCOCK & WILCOX CO as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate BABCOCK & WILCOX CO (BWC) 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 good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 9.7%. Since the same quarter one year prior, revenues slightly increased by 4.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The current debt-to-equity ratio, 0.30, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.03, which illustrates the ability to avoid short-term cash problems.
- 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 Electrical Equipment industry and the overall market, BABCOCK & WILCOX CO's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for BABCOCK & WILCOX CO is currently extremely low, coming in at 5.42%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -12.34% is significantly below that of the industry average.
- You can view the full analysis from the report here: BWC Ratings Report