NEW YORK ( TheStreet) -- Industrial Services of America (Nasdaq: IDSA) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, growth in earnings per share and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including poor profit margins, weak operating cash flow and generally poor debt management. Highlights from the ratings report include:
- Net operating cash flow has significantly decreased to -$0.43 million or 110.07% 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 INDUSTRIAL SERVICES AMER INC is currently extremely low, coming in at 8.40%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 2.00% trails that of the industry average.
- The net income growth from the same quarter one year ago has exceeded that of the Commercial Services & Supplies industry average, but is less than that of the S&P 500. The net income increased by 22.9% when compared to the same quarter one year prior, going from $1.76 million to $2.17 million.
- INDUSTRIAL SERVICES AMER INC has improved earnings per share by 13.4% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, INDUSTRIAL SERVICES AMER INC increased its bottom line by earning $1.20 versus $0.90 in the prior year. This year, the market expects an improvement in earnings ($1.35 versus $1.20).
- The revenue growth greatly exceeded the industry average of 3.9%. Since the same quarter one year prior, revenues rose by 43.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.