NEW YORK ( TheStreet) -- Stage Stores (NYSE: SSI) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and poor profit margins.

Highlights from the ratings report include:
  • The gross profit margin for STAGE STORES INC is currently lower than what is desirable, coming in at 29.10%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -0.10% trails that of the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Specialty Retail industry. The net income has significantly decreased by 121.0% when compared to the same quarter one year ago, falling from $2.20 million to -$0.46 million.
  • STAGE STORES INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, STAGE STORES INC increased its bottom line by earning $1.01 versus $0.75 in the prior year. This year, the market expects an improvement in earnings ($1.06 versus $1.01).
  • Net operating cash flow has significantly increased by 193.02% to $5.83 million when compared to the same quarter last year. In addition, STAGE STORES INC has also vastly surpassed the industry average cash flow growth rate of -25.65%.
  • The revenue growth came in higher than the industry average of 13.0%. Since the same quarter one year prior, revenues slightly increased by 1.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.

Stage Stores, Inc. operates as a specialty department store retailer in the United States. The company has a P/E ratio of 17.3, equal to the average retail industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Stage Stores has a market cap of $618.3 million and is part of the services sector and retail industry. Shares are down 4% year to date as of the close of trading on Friday.

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