Our latest report on NFI was in September 2022 and at that time we acknowledged its high debt levels, weak share price momentum, and slower conversion of its backlog. In the latest report, we mentioned our temptation to downgrade the company from a 'B' rating but opted to wait a few quarters to assess if the fundamentals improved.
Our rating methodology primarily stems from the 'report card' section of our research reports. Companies are provided a report card grading system, where growth, profit, and ownership metrics are graded from D+/F to A+. A lot of the factors driving its 'B' rating were due to its high expected 1-year growth rates, a good liquidity ratio (1.8X current ratio), and strong contract wins, although it does share some C/C- ratings due to its weak margins and historical growth.