NEW YORK ( TheStreet) -- Universal Truckload Services (Nasdaq: UACL) 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, reasonable valuation levels and notable return on equity. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, unimpressive growth in net income and poor profit margins. Highlights from the ratings report include:
- UACL's revenue growth has slightly outpaced the industry average of 16.0%. Since the same quarter one year prior, revenues rose by 16.6%. 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.
- UNIVERSAL TRUCKLOAD SERVICES's earnings per share declined by 13.8% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, UNIVERSAL TRUCKLOAD SERVICES increased its bottom line by earning $0.80 versus $0.31 in the prior year. This year, the market expects an improvement in earnings ($0.94 versus $0.80).
- The gross profit margin for UNIVERSAL TRUCKLOAD SERVICES is rather low; currently it is at 20.60%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 2.20% significantly trails the industry average.
- Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, UACL has underperformed the S&P 500 Index, declining 15.67% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.