Editor's Note: 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. 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 generally high debt management risk, disappointing return on equity and feeble growth in its earnings per share.
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- The debt-to-equity ratio is very high at 8.12 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, ISLE maintains a poor quick ratio of 0.71, which illustrates the inability to avoid short-term cash problems.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. 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 -$1.17 versus -$0.46 in the prior year. This year, the market expects an improvement in earnings ($0.57 versus -$1.17).
- ISLE, with its decline in revenue, slightly underperformed the industry average of 2.7%. Since the same quarter one year prior, revenues slightly dropped by 5.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- 47.00% 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 -16.93% significantly underperformed when compared to the industry average.
-- Written by a member of TheStreet Ratings Staff
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