NEW YORK ( TheStreet) -- Red Lion Hotels Corporation (NYSE: RLH) has been upgraded by TheStreet Ratings from sell to hold. Among the primary strengths of the company is its solid stock price performance. At the same time, however, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow. Highlights from the ratings report include:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Hotels, Restaurants & Leisure industry. The net income has decreased by 9.0% when compared to the same quarter one year ago, dropping from -$4.37 million to -$4.76 million.
- Net operating cash flow has significantly decreased to -$3.06 million or 314.12% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- RED LION HOTELS CORP's earnings per share declined by 8.7% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse 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 (-$0.20 versus -$0.44).
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 0.9%. Since the same quarter one year prior, revenues slightly dropped by 0.1%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. 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.