NEW YORK ( TheStreet) -- Euroseas (Nasdaq: ESEA) 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 find that the company's profit margins have been poor overall. Highlights from the ratings report include:
- The gross profit margin for EUROSEAS LTD is rather low; currently it is at 23.80%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -7.00% is significantly below that of the industry average.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Marine industry and the overall market on the basis of return on equity, EUROSEAS LTD underperformed against that of the industry average and is significantly less than that of the S&P 500.
- The revenue fell significantly faster than the industry average of 16.2%. Since the same quarter one year prior, revenues fell by 22.4%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- EUROSEAS LTD 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 year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, EUROSEAS LTD continued to lose money by earning -$0.21 versus -$0.51 in the prior year. This year, the market expects an improvement in earnings (-$0.06 versus -$0.21).
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.