NEW YORK (
-- American Greetings Corporation
) 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 expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and a generally disappointing performance in the stock itself.
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 Household Durables industry. The net income has decreased by 17.6% when compared to the same quarter one year ago, dropping from $18.80 million to $15.48 million.
- Net operating cash flow has declined marginally to $122.06 million or 0.99% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, AMERICAN GREETINGS has marginally lower results.
- The current debt-to-equity ratio, 0.31, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.98 is somewhat weak and could be cause for future problems.
- Despite its growing revenue, the company underperformed as compared with the industry average of 10.5%. Since the same quarter one year prior, revenues slightly increased by 0.9%. 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.
American Greetings Corporation, together with its subsidiaries, engages in the design, manufacture, and sale of greeting cards and other social expression products worldwide. The company has a P/E ratio of 129.3, above the average diversified services industry P/E ratio of 11.3 and above the S&P 500 P/E ratio of 17. American Greetings has a market cap of $914.9 million and is part of the
industry. Shares are up 6.9% year to date as of the close of trading on Thursday.
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