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Ennis Inc. Stock Downgraded (EBF)

NEW YORK ( TheStreet) -- Ennis (NYSE: EBF) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its 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 deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:

  • EBF's debt-to-equity ratio is very low at 0.25 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.38, which illustrates the ability to avoid short-term cash problems.
  • EBF, with its decline in revenue, slightly underperformed the industry average of 2.4%. Since the same quarter one year prior, revenues slightly dropped by 7.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Net operating cash flow has significantly decreased to -$2.39 million or 212.57% 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's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Commercial Services & Supplies industry and the overall market, ENNIS INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.

Ennis, Inc., together with its subsidiaries, engages in the print and manufacture of business forms and other business products. The company operates in two segments, Print and Apparel. The Print segment designs, manufactures, and sells business forms and other printed business products. The company has a P/E ratio of 12.2, equal to the average consumer non-durables industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Ennis has a market cap of $386.8 million and is part of the consumer goods sector and consumer non-durables industry. Shares are up 5.9% year to date as of the close of trading on Wednesday.

You can view the full Ennis Ratings Report or get investment ideas from our investment research center.

-- 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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