Reading International Inc. Stock Downgraded (RDI)

NEW YORK (TheStreet) -- Reading International (Nasdaq:RDI) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including generally poor debt management and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

• The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Media industry. The net income increased by 227.1% when compared to the same quarter one year prior, rising from -$13.71 million to $17.43 million.
• Despite its growing revenue, the company underperformed as compared with the industry average of 20.0%. Since the same quarter one year prior, revenues rose by 17.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
• The gross profit margin for READING INTL INC is rather low; currently it is at 24.40%. Regardless of RDI's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, RDI's net profit margin of 26.00% significantly outperformed against the industry.
• RDI has underperformed the S&P 500 Index, declining 14.90% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
• Currently the debt-to-equity ratio of 1.66 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. To add to this, RDI has a quick ratio of 0.55, this demonstrates the lack of ability of the company to cover short-term liquidity needs.

Reading International, Inc., together with its subsidiaries, engages in the development, ownership, and operation of entertainment and real property assets in the United States, Australia, and New Zealand. The company has a P/E ratio of 6.9, below the S&P 500 P/E ratio of 17.7. Reading International has a market cap of $90.1 million and is part of the services sector and media industry. Shares are down 20.8% year to date as of the close of trading on Thursday.

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