TSC Ratings' Updates: Finish Line

Revenue fell by 31.5%, significantly faster than the industry average of 18.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share. Earnings per share declined by 32.3% in the most recent quarter compared with 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, Delhaize increased its bottom line by earning $5.56 versus $5.53 in the prior year. This year, the market expects an improvement in earnings to $6.11.

We've downgraded mall-based specialty retailer Finish Line (FINL Quote) from hold to sell, driven by its disappointing return on equity and poor profit margins.

Return on equity has greatly decreased when compared withthe same quarter one year prior, a signal of major weakness within the corporation. Finish Line's gross profit margin is currently lower than what is desirable at 25.9%, having decreased from the same quarter the previous year, and its net profit margin of -3.40% trails the industry average. Revenue dropped by 4.4%. Net income growth of 44.6% to -$8.8 million, however, significantly exceed that of the S&P 500 and the specialty retail industry.

EPS improved by 44.8% in the most recent quarter compared with the same quarter last year. Finish Line has reported somewhat volatile earnings recently, but we feel it is poised for EPS growth in the coming year. During the past fiscal year, it swung to a loss, reporting -$1.03 versus 84 cents in the prior year. This year, the market expects an improvement in earnings to 60 cents.