Chuck Royce (Trades, Portfolio)Â trimmed 18,400 shares of The L.S. Starrett Co. (SCX, Financial) from his portfolio in the fourth quarter.
Starrett has a market cap of $78.57 million, an enterprise value of $75.54 million and a price-book (P/B) ratio of 0.87.
Starrett is engaged in manufacturing industrial, professional and consumer measuring and cutting tools and related products. It operates in North America, Brazil, China and the United Kingdom.
According to GuruFocus, Starrett has a 6 of 10 financial strength rating with a cash-debt ratio of 1.17, an equity-asset ratio of 0.46 and a Piotroski F-Score of 4, which indicates the company’s financial situation is typical for a stable company.
Starrett has a 3 of 10 profitability and growth rating with an operating margin of -10.83%, a net margin of -6.36%, a return on equity (ROE) of -13.28%, three-year revenue growth of -5.90% and a return on capital (ROC)Â of -17.82%.
GuruFocus has detected two severe warning signs.
- Revenue per share growth rate was -3.70% per year over the previous five years.
- Gross margin has been in long-term decline of -4.80% per year over the previous five years.
Starrett also has a 1-star predictability rating according to GuruFocus. Based on backtesting results, stocks with a 1-star predictability rating produce, on average, a 1.1% yearly return over a 10-year sample size.
Since Royce reduced his stake, the company’s market price has gained an estimated 22%.
Below is a Peter Lynch chart that shows Starrett is trading above its intrinsic value.
Disclosure: The author does not own any shares of this company.
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