BOSTON (TheStreet Ratings) -- Every trading day TheStreet Ratings' stock model reviews the investment ratings on around 4,800 U.S. traded stocks for potential upgrades or downgrades based on the latest available financial results and trading activity.
TheStreet Ratings released rating changes on 34 U.S. common stocks for week ending September 16, 2011. 14 stocks were upgraded and 20 stocks were downgraded by our stock model.
Rating Change #10
Guess? Inc (GES) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and a generally disappointing performance in the stock itself.Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 7.8%. Since the same quarter one year prior, revenues rose by 17.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Although GES's debt-to-equity ratio of 0.01 is very low, it is currently higher than that of the industry average. To add to this, GES has a quick ratio of 1.89, which demonstrates the ability of the company to cover short-term liquidity needs.
- GUESS INC's earnings per share declined by 9.7% in the most recent quarter compared to 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, GUESS INC increased its bottom line by earning $3.12 versus $2.61 in the prior year. This year, the market expects an improvement in earnings ($3.30 versus $3.12).
- Net operating cash flow has decreased to $40.54 million or 27.72% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Specialty Retail industry. The net income has decreased by 9.1% when compared to the same quarter one year ago, dropping from $66.76 million to $60.66 million.
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