NEW YORK (
) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally poor debt management and disappointing return on equity.
Highlights from the ratings report include:
- OMX's revenue growth has slightly outpaced the industry average of 0.7%. Since the same quarter one year prior, revenues slightly increased by 3.9%. 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.
- The debt-to-equity ratio is very high at 3.05 and currently higher than the industry average, implying that there is very poor management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, OMX maintains a poor quick ratio of 0.97, which illustrates the inability to avoid short-term cash problems.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. In comparison to the other companies in the Specialty Retail industry and the overall market, OFFICEMAX INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
OfficeMax Incorporated, together with its subsidiaries, distributes business-to-business and retail office products. The company has a P/E ratio of 14.7, above the average specialty retail industry P/E ratio of 12.6 and below the S&P 500 P/E ratio of 17.7. OfficeMax has a market cap of $519.3 million and is part of the
industry. Shares are up 30.2% year to date as of the close of trading on Thursday.
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-- Written by a member of TheStreet RatingsStaff