NEW YORK ( TheStreet) -- Acorn International (NYSE: ATV) 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, largely solid financial position with reasonable debt levels by most measures and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • The gross profit margin for ACORN INTERNATIONAL INC -ADR is currently lower than what is desirable, coming in at 29.60%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -12.30% 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 Internet & Catalog Retail industry and the overall market, ACORN INTERNATIONAL INC -ADR's return on equity significantly trails that of both the industry average and the S&P 500.
  • The net income growth from the same quarter one year ago has exceeded that of the Internet & Catalog Retail industry average, but is less than that of the S&P 500. The net income increased by 18.5% when compared to the same quarter one year prior, going from -$10.66 million to -$8.69 million.
  • ATV's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 4.03, which clearly demonstrates the ability to cover short-term cash needs.
  • ATV's revenue growth has slightly outpaced the industry average of 16.1%. Since the same quarter one year prior, revenues rose by 18.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.

Acorn International, Inc., an integrated multi-platform marketing company, operates TV direct sales businesses and a nationwide off-TV distribution network. Its TV direct sales platform consists of airtime purchased from national and local channels. Acorn International has a market cap of $135.4 million and is part of the services sector and retail industry. Shares are up 12.6% year to date as of the close of trading on Monday.

You can view the full Acorn International Ratings Report or get investment ideas from our investment research center.
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