NEW YORK ( TheStreet) -- Real Goods Solar (Nasdaq: RSOL) has been upgraded by TheStreet Ratings from sell 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 compelling growth in net income. However, as a counter to these strengths, we find that the company's profit margins have been poor overall. Highlights from the ratings report include:
- The gross profit margin for REAL GOODS SOLAR INC is currently lower than what is desirable, coming in at 29.70%. Regardless of RSOL's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 0.20% trails the industry average.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Electrical Equipment industry and the overall market, REAL GOODS SOLAR INC's return on equity significantly trails that of both the industry average and the S&P 500.
- This stock has managed to rise its share value by 6.48% over the past twelve months. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
- RSOL's debt-to-equity ratio is very low at 0.10 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, RSOL has a quick ratio of 2.09, which demonstrates the ability of the company to cover short-term liquidity needs.
- RSOL's revenue growth has slightly outpaced the industry average of 14.6%. Since the same quarter one year prior, revenues rose by 16.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.