NEW YORK (TheStreet) -- Isle of Capri Casinos (Nasdaq:ISLE) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally weak debt management, disappointing return on equity and feeble growth in its earnings per share. Highlights from the ratings report include:
- 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 Hotels, Restaurants & Leisure industry. The net income has significantly decreased by 1247.9% when compared to the same quarter one year ago, falling from $10.87 million to -$124.79 million.
- The debt-to-equity ratio is very high at 6.29 and currently higher than the industry average, implying that there is very poor management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, ISLE maintains a poor quick ratio of 0.87, which illustrates the inability to avoid short-term cash problems.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, ISLE OF CAPRI CASINOS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- ISLE OF CAPRI CASINOS INC 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. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, ISLE OF CAPRI CASINOS INC reported poor results of -$0.45 versus $0.00 in the prior year. This year, the market expects an improvement in earnings ($0.39 versus -$0.45).
- 49.20% is the gross profit margin for ISLE OF CAPRI CASINOS INC which we consider to be strong. Regardless of ISLE's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ISLE's net profit margin of -44.20% significantly underperformed when compared to the industry average.
-- Written by a member of TheStreet Ratings Staff
TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
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