NEW YORK (
-- Elizabeth Arden
) 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, largely solid financial position with reasonable debt levels by most measures and growth in earnings per share. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall.
Highlights from the ratings report include:
- Net operating cash flow has significantly decreased to $4.87 million or 81.18% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. In comparison to the other companies in the Personal Products industry and the overall market, ELIZABETH ARDEN INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 65.58% over the past year, a rise that has exceeded that of the S&P 500 Index. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
- The debt-to-equity ratio is somewhat low, currently at 0.63, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.05, which illustrates the ability to avoid short-term cash problems.
- RDEN's revenue growth has slightly outpaced the industry average of 3.1%. Since the same quarter one year prior, revenues slightly increased by 6.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
Elizabeth Arden, Inc., a prestige beauty products company, sells fragrances, and skin care and cosmetic products to retailers and other outlets in the United States and internationally. The company has a P/E ratio of 24.2, below the average consumer non-durables industry P/E ratio of 24.4 and above the S&P 500 P/E ratio of 17. Elizabeth Arden has a market cap of $912.3 million and is part of the
industry. Shares are up 33.6% year to date as of the close of trading on Thursday.
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