Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
NEW YORK (
) has been reiterated by TheStreet Ratings as a hold with a ratings score of C . The company's strengths can be seen in multiple areas, such as its attractive valuation levels, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, poor profit margins and a generally disappointing performance in the stock itself.
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Highlights from the ratings report include:
- Net operating cash flow has increased to $109.92 million or 19.61% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -20.89%.
- The current debt-to-equity ratio, 0.30, 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 0.72 is somewhat weak and could be cause for future problems.
- 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 Specialty Retail industry. The net income has significantly decreased by 31.7% when compared to the same quarter one year ago, falling from $176.44 million to $120.43 million.
- The gross profit margin for STAPLES INC is currently lower than what is desirable, coming in at 27.80%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 2.20% trails that of the industry average.
Staples, Inc., together with its subsidiaries, operates as an office products company. The company offers various office supplies and services, office machines and related products, computers and related products, and office furniture under Staples, Quill, and other proprietary brands. The company has a P/E ratio of 8.9, equal to the average specialty retail industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Staples has a market cap of $8.05 billion and is part of the
industry. Shares are down 15% year to date as of the close of trading on Wednesday.
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--Written by a member of TheStreet Ratings Staff.
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