NEW YORK ( TheStreet) -- Lumber Liquidators Holdings Inc (NYSE: LL) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, revenue growth and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and weak operating cash flow. Highlights from the ratings report include:
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 35.63%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 40.62% compared to the year-earlier quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, LL is still more expensive than most of the other companies in its industry.
- Net operating cash flow has decreased to -$7.61 million or 43.27% 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.
- LUMBER LIQUIDATORS HLDGS INC's earnings per share declined by 40.6% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, LUMBER LIQUIDATORS HLDGS INC reported lower earnings of $0.93 versus $0.97 in the prior year. This year, the market expects an improvement in earnings ($1.00 versus $0.93).
- 35.20% is the gross profit margin for LUMBER LIQUIDATORS HLDGS INC which we consider to be strong. Regardless of LL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 3.00% trails the industry average.
- The revenue growth came in higher than the industry average of 13.3%. Since the same quarter one year prior, revenues slightly increased by 4.0%. 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.