NEW YORK (
-- CPI Corporation
) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including generally poor debt management, weak operating cash flow and a generally disappointing performance in the stock itself.
Highlights from the ratings report include:
- The debt-to-equity ratio is very high at 3.43 and currently higher than the industry average, implying that there is very poor management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.22, which clearly demonstrates the inability to cover short-term cash needs.
- Net operating cash flow has decreased to $23.12 million or 25.77% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- 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 Diversified Consumer Services industry and the overall market, CPI CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.
- CPY, with its decline in revenue, slightly underperformed the industry average of 0.8%. Since the same quarter one year prior, revenues slightly dropped by 8.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The gross profit margin for CPI CORP is currently very high, coming in at 93.50%. Regardless of CPY's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CPY's net profit margin of 11.60% compares favorably to the industry average.
CPI Corp., through its subsidiaries, manufactures and sells professional portrait photography of young children, individuals, and families. The company has a P/E ratio of 8.8, equal to the average diversified services industry P/E ratio and below the S&P 500 P/E ratio of 17.7. CPI has a market cap of $101.4 million and is part of the
industry. Shares are down 36.6% year to date as of the close of trading on Friday.
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