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, impressive record of earnings per share growth, good cash flow from operations, solid stock price performance and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the ratings report include:
- The current debt-to-equity ratio, 0.54, 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 0.84 is somewhat weak and could be cause for future problems.
- Powered by its strong earnings growth of 85.70% and other important driving factors, this stock has surged by 123.40% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- Net operating cash flow has significantly increased by 122.92% to $74.33 million when compared to the same quarter last year. In addition, DSW INC has also vastly surpassed the industry average cash flow growth rate of -0.49%.
- DSW INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, DSW INC turned its bottom line around by earning $0.25 versus -$4.05 in the prior year. This year, the market expects an improvement in earnings ($2.78 versus $0.25).
- The revenue growth came in higher than the industry average of 9.9%. Since the same quarter one year prior, revenues rose by 16.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
Retail Ventures, Inc. through its subsidiary, DSW Inc., operates as a specialty branded footwear retailer in the United States. The company, through DSW stores and dsw.com, offers a selection of branded dress, casual, and athletic footwear and accessories for women and men. The company has a P/E ratio of 19.1, below the average retail industry P/E ratio of 19.2 and above the S&P 500 P/E ratio of 17.7. DSW has a market cap of $824.2 million and is part of the
industry. Shares are up 27.7% year to date as of the close of trading on Friday.
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