NEW YORK ( TheStreet) -- Red Lion Hotels Corporation (NYSE: RLH) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity and poor profit margins. Highlights from the ratings report include:
- The debt-to-equity ratio is somewhat low, currently at 0.74, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.21 is very weak and demonstrates a lack of ability to pay short-term obligations.
- The net income growth from the same quarter one year ago has exceeded that of the Hotels, Restaurants & Leisure industry average, but is less than that of the S&P 500. The net income increased by 14.9% when compared to the same quarter one year prior, going from -$8.49 million to -$7.22 million.
- RED LION HOTELS CORP has improved earnings per share by 13.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, RED LION HOTELS CORP reported poor results of -$0.44 versus -$0.36 in the prior year. This year, the market expects an improvement in earnings (-$0.17 versus -$0.44).
- The gross profit margin for RED LION HOTELS CORP is currently extremely low, coming in at 2.00%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -19.60% is significantly below that of the industry average.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, RED LION HOTELS CORP's return on equity significantly trails that of both the industry average and the S&P 500.