NEW YORK ( TheStreet) -- Dixie Group (Nasdaq: DXYN) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in stock price during the past year and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including generally poor debt management, poor profit margins and weak operating cash flow.

Highlights from the ratings report include:
  • 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.
  • 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.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. 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.
  • The revenue growth greatly exceeded the industry average of 16.8%. Since the same quarter one year prior, revenues rose by 30.7%. Growth in the company's revenue appears to have helped boost the earnings per share.

The Dixie Group, Inc. engages in the manufacture, marketing, and sale of carpets and rugs to residential and commercial customers primarily in the United States. It also offers broadloom and modular carpets for the specified commercial marketplace. Dixie Group has a market cap of $53.1 million and is part of the industrial goods sector and industrial industry. Shares are up 17.3% year to date as of the close of trading on Friday.

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