NEW YORK ( TheStreet) -- Dixie Group (Nasdaq: DXYN) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its generally weak debt management, poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Household Durables industry and the overall market, DIXIE GROUP INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • DXYN has underperformed the S&P 500 Index, declining 5.63% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • Net operating cash flow has significantly decreased to -$2.79 million or 140.70% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The gross profit margin for DIXIE GROUP INC is currently lower than what is desirable, coming in at 28.90%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.90% trails that of the industry average.
  • The debt-to-equity ratio of 1.12 is relatively high when compared with the industry average, suggesting a need for better debt level management. To add to this, DXYN has a quick ratio of 0.69, this demonstrates the lack of ability of the company to cover short-term liquidity needs.

The Dixie Group, Inc. engages in the manufacture, marketing, and sale of carpets and rugs to residential and commercial customers in the United States and internationally. It also offers broadloom and modular carpet for the specified commercial marketplace. Dixie Group has a market cap of $52.4 million and is part of the industrial goods sector and industrial industry. Shares are up 12.9% year to date as of the close of trading on Monday.

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