NEW YORK ( TheStreet) -- Duckwall-Alco Stores (Nasdaq: DUCK) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its revenue growth 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, disappointing return on equity and poor profit margins. Highlights from the ratings report include:
- The gross profit margin for DUCKWALL ALCO STORES INC is currently lower than what is desirable, coming in at 29.30%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.50% trails that of the industry average.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Multiline Retail industry and the overall market, DUCKWALL ALCO STORES INC's return on equity significantly trails that of both the industry average and the S&P 500.
- DUCKWALL ALCO STORES INC's earnings per share improvement from the most recent quarter was slightly positive. This company has not demonstrated a clear trend in earnings over the past two years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, DUCKWALL ALCO STORES INC swung to a loss, reporting -$0.94 versus $0.54 in the prior year.
- The current debt-to-equity ratio, 0.57, is low and is below the industry average, implying that there has been successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.24 is very weak and demonstrates a lack of ability to pay short-term obligations.
- DUCK's revenue growth has slightly outpaced the industry average of 3.7%. Since the same quarter one year prior, revenues slightly increased by 4.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.