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 (
) 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, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, unimpressive growth in net income and weak operating cash flow.
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Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 1.6%. Since the same quarter one year prior, revenues rose by 15.9%. 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.
- 44.00% is the gross profit margin for BLACK DIAMOND INC which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, BDE's net profit margin of 1.50% significantly trails the industry average.
- BDE's debt-to-equity ratio is very low at 0.17 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.99 is somewhat weak and could be cause for future problems.
- 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 Leisure Equipment & Products industry. The net income has significantly decreased by 27.9% when compared to the same quarter one year ago, falling from $1.01 million to $0.73 million.
- Net operating cash flow has decreased to -$10.16 million or 14.28% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
Black Diamond, Inc., together with its subsidiaries, engages in designing, manufacturing, and marketing outdoor performance products for climbing, mountaineering, backpacking, skiing, and other outdoor recreation activities in the United States and internationally. The company has a P/E ratio of 40.7, above the S&P 500 P/E ratio of 17.7. Black has a market cap of $268.1 million and is part of the consumer goods sector and consumer durables industry. Shares are up 14.5% year to date as of the close of trading on Friday.
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-- Written by a member of TheStreet Ratings Staff
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