NEW YORK ( TheStreet) -- Wacoal Holdings Corporation (Nasdaq: WACLY) 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, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and relatively poor performance when compared with the S&P 500 during the past year.

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 when compared to that of the S&P 500 and the Textiles, Apparel & Luxury Goods industry. The net income has significantly decreased by 87.7% when compared to the same quarter one year ago, falling from -$13.41 million to -$25.18 million.
  • Net operating cash flow has significantly decreased to $1.45 million or 81.67% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • WACOAL HOLDINGS CORP 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 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, WACOAL HOLDINGS CORP increased its bottom line by earning $1.12 versus $0.96 in the prior year.
  • WACLY's debt-to-equity ratio is very low at 0.04 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, WACLY has a quick ratio of 1.51, which demonstrates the ability of the company to cover short-term liquidity needs.
  • WACLY's revenue growth has slightly outpaced the industry average of 4.9%. Since the same quarter one year prior, revenues slightly increased by 5.0%. 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.

Wacoal Holdings Corp. engages in the manufacture and sale of women's intimate apparel, foundation garments, and lingerie. The company has a P/E ratio of 63.1, above the average consumer non-durables industry P/E ratio of 54.2 and above the S&P 500 P/E ratio of 17.7. Wacoal has a market cap of $1.7 billion and is part of the consumer goods sector and consumer non-durables industry. Shares are down 17.2% year to date as of the close of trading on Friday.

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