NEW YORK ( TheStreet) -- Dixie Group (Nasdaq: DXYN) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including generally poor debt management and poor profit margins. Highlights from the ratings report include:
- The debt-to-equity ratio of 1.04 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, DXYN maintains a poor quick ratio of 0.77, which illustrates the inability to avoid short-term cash problems.
- The gross profit margin for DIXIE GROUP INC is currently lower than what is desirable, coming in at 25.30%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.80% trails that of the industry average.
- DIXIE GROUP INC reported significant earnings per share improvement 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. This trend suggests that the performance of the business is improving. During the past fiscal year, DIXIE GROUP INC continued to lose money by earning -$0.35 versus -$3.41 in the prior year. This year, the market expects an improvement in earnings ($0.05 versus -$0.35).
- Powered by its strong earnings growth of 118.51% and other important driving factors, this stock has surged by 49.31% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.