Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet, Inc., or any of its contributors. TheStreet Ratings quantitative algorithm evaluates over 4,300 stocks on a daily basis by 32 different data factors and assigns a unique buy, sell, or hold recommendation on each stock. Click here to learn more.
"We rate TUMI HOLDINGS INC (TUMI) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, increase in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- TUMI HOLDINGS INC has improved earnings per share by 12.9% 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 two years. We feel that this trend should continue. During the past fiscal year, TUMI HOLDINGS INC increased its bottom line by earning $0.86 versus $0.81 in the prior year. This year, the market expects an improvement in earnings ($0.96 versus $0.86).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Textiles, Apparel & Luxury Goods industry average. The net income increased by 14.2% when compared to the same quarter one year prior, going from $20.78 million to $23.72 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 17.3%. Since the same quarter one year prior, revenues rose by 11.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- TUMI has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.23, which illustrates the ability to avoid short-term cash problems.
- The gross profit margin for TUMI HOLDINGS INC is rather high; currently it is at 57.67%. Regardless of TUMI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, TUMI's net profit margin of 14.47% compares favorably to the industry average.
- You can view the full analysis from the report here: TUMI Ratings Report