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Appliance Recycling Centers Stock Downgraded (ARCI)

By TheStreet Wire 04/17/12 - 06:00 AM EDT

Find out if (ARCI) is in Cramer's Portfolio.

NEW YORK (TheStreet) -- Appliance Recycling Centers (Nasdaq:ARCI) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, generally poor debt management and poor profit margins.

Highlights from the ratings report include:

The revenue growth came in higher than the industry average of 0.3%. Since the same quarter one year prior, revenues rose by 10.4%. 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.
Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. In comparison to other companies in the Specialty Retail industry and the overall market on the basis of return on equity, APPLIANCE RECYCLING CTR AMER has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.
The gross profit margin for APPLIANCE RECYCLING CTR AMER is currently lower than what is desirable, coming in at 29.80%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.00% trails that of the industry average.
Net operating cash flow has significantly decreased to -$1.87 million or 754.73% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

Appliance Recycling Centers of America, Inc., together with its subsidiaries, sells new household appliances through a chain of its factory outlet stores under the name ApplianceSmart. The company has a P/E ratio of 5.7, below the average consumer durables industry P/E ratio of six and below the S&P 500 P/E ratio of 17.7. Appliance Recycling Centers has a market cap of $25.8 million and is part of the consumer goods sector and consumer durables industry. Shares are down 8% year to date as of the close of trading on Monday.

You can view the full Appliance Recycling Centers Ratings Report or get investment ideas from our investment research center.
-- Written by a member of TheStreet Ratings Staff

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