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NEW YORK (

TheStreet

)

-- Celadon Group

(NYSE:

CGI

) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity.

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Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 8.4%. Since the same quarter one year prior, revenues rose by 29.1%. 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.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
  • CELADON GROUP INC's earnings per share declined by 21.1% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, CELADON GROUP INC increased its bottom line by earning $1.18 versus $1.12 in the prior year. For the next year, the market is expecting a contraction of 16.9% in earnings ($0.98 versus $1.18).
  • The gross profit margin for CELADON GROUP INC is currently extremely low, coming in at 10.53%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.80% significantly trails the industry average.
  • Net operating cash flow has significantly decreased to $4.64 million or 72.93% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

Celadon Group, Inc., through its subsidiaries, provides transportation services between the United States, Canada, and Mexico. The company offers a range of truckload transportation services, such as long-haul, regional, dedicated, less-than-truckload, intermodal, and logistics services. Celadon Group has a market cap of $532.5 million and is part of the services sector and transportation industry. Shares are up 17.5% year to date as of the close of trading on Friday.

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