NEW YORK ( TheStreet Ratings) -- Every trading day TheStreet Ratings' stock model reviews the investment ratings on around 4,700 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 84 U.S. common stocks for week ending April 27, 2012. 48 stocks were upgraded and 36 stocks were downgraded by our stock model.
Rating Change #10
Deckers Outdoor Corporation (DECK) 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 reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, disappointing return on equity and a generally disappointing performance in the stock itself.Highlights from the ratings report include:
- DECK's revenue growth has slightly outpaced the industry average of 15.1%. Since the same quarter one year prior, revenues rose by 20.2%. 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.
- DECK has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 3.54, which clearly demonstrates the ability to cover short-term cash needs.
- DECKERS OUTDOOR CORP has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, DECKERS OUTDOOR CORP increased its bottom line by earning $5.07 versus $4.03 in the prior year. This year, the market expects an improvement in earnings ($5.14 versus $5.07).
- 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 Textiles, Apparel & Luxury Goods industry and the overall market on the basis of return on equity, DECKERS OUTDOOR CORP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Textiles, Apparel & Luxury Goods industry. The net income has significantly decreased by 58.9% when compared to the same quarter one year ago, falling from $19.18 million to $7.89 million.