Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link
NEW YORK (
) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, expanding profit margins, growth in earnings per share and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows 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 6.3%. Since the same quarter one year prior, revenues rose by 18.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The gross profit margin for CHEROKEE INC/DE is rather high; currently it is at 50.02%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 25.85% significantly outperformed against the industry average.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Textiles, Apparel & Luxury Goods industry average. The net income increased by 20.5% when compared to the same quarter one year prior, going from $1.61 million to $1.94 million.
- CHKE's debt-to-equity ratio of 0.89 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that CHKE's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.82 is high and demonstrates strong liquidity.
- CHEROKEE INC/DE has improved earnings per share by 21.1% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CHEROKEE INC/DE reported lower earnings of $0.82 versus $0.89 in the prior year. This year, the market expects an improvement in earnings ($0.91 versus $0.82).
Cherokee Inc. markets, manages, and licenses fashion and lifestyle brands that it owns or represents for apparel, footwear, home, and accessories worldwide. Cherokee has a market cap of $115.9 million and is part of the services sector and retail industry. Shares are up 0.6% year to date as of the close of trading on Tuesday.
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