NEW YORK (TheStreet) -- Shares of Ethan Allen Interiors Inc (ETH) - Get Report were spiking, up 5.95% to $31.54 in midday trading Wednesday, after investor Tom Sandell, who runs Sandell Asset Management, named the home furnishings company his best investment idea, according to CNBC.

CNBC tweeted earlier today:

Speaking at the Delivering Alpha conference in New York City, Sandell said the furniture chain is an ideal target to be acquired by private-equity firms.

Sandell noted that about half of Ethan Allen's assets are real estate related, making it a prime target for private-equity investors, who often use debt to generate returns on their investments, MarketWatch reports.

Danbury, Conn.-based Ethan Allen is an interior design company through its wholly owned subsidiary, Ethan Allen Global.

The company is a manufacturer and retailer of home furnishings and accessories that offers interior design service to its clients and sells a range of furniture products and decorative accents through ethanallen.com and about 300 design centers.

Separately, TheStreet Ratings team rates ETHAN ALLEN INTERIORS INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate ETHAN ALLEN INTERIORS INC (ETH) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and feeble growth in the company's earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 8.3%. Since the same quarter one year prior, revenues slightly increased by 0.1%. 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.
  • ETH's debt-to-equity ratio is very low at 0.21 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Despite the fact that ETH's debt-to-equity ratio is low, the quick ratio, which is currently 0.59, displays a potential problem in covering short-term cash needs.
  • Net operating cash flow has decreased to $11.99 million or 31.13% when compared to the same quarter last year. Despite a decrease in cash flow ETHAN ALLEN INTERIORS INC is still fairing well by exceeding its industry average cash flow growth rate of -61.27%.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Household Durables industry. The net income has significantly decreased by 51.8% when compared to the same quarter one year ago, falling from $5.26 million to $2.54 million.
  • You can view the full analysis from the report here: ETH Ratings Report