NEW YORK (TheStreet) -- Duckwall-Alco Stores (Nasdaq:DUCK) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, poor profit margins and generally disappointing historical performance in the stock itself. Highlights from the ratings report include:
- The debt-to-equity ratio is somewhat low, currently at 0.63, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.25 is very weak and demonstrates a lack of ability to pay short-term obligations.
- DUCKWALL ALCO STORES INC has improved earnings per share by 15.3% in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past two years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, DUCKWALL ALCO STORES INC swung to a loss, reporting -$0.94 versus $0.54 in the prior year.
- DUCK's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 29.49%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- The gross profit margin for DUCKWALL ALCO STORES INC is currently lower than what is desirable, coming in at 29.00%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -1.60% trails that of the industry average.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Multiline Retail industry and the overall market, DUCKWALL ALCO STORES INC's return on equity significantly trails that of both the industry average and the S&P 500.
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