NEW YORK ( TheStreet) -- Perry Ellis International (Nasdaq: PERY) 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, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including poor profit margins and a generally disappointing performance in the stock itself. Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 0.3%. Since the same quarter one year prior, revenues rose by 32.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- ELLIS PERRY INTL INC reported significant earnings per share improvement 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, ELLIS PERRY INTL INC increased its bottom line by earning $1.71 versus $0.99 in the prior year. This year, the market expects an improvement in earnings ($2.49 versus $1.71).
- Despite currently having a low debt-to-equity ratio of 0.46, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.24 is sturdy.
- PERY has underperformed the S&P 500 Index, declining 19.19% 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.
- The gross profit margin for ELLIS PERRY INTL INC is currently lower than what is desirable, coming in at 32.10%. 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.