NEW YORK ( TheStreet) -- Kirkland's (Nasdaq: KIRK) 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 reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and poor profit margins.

Highlights from the ratings report include:
  • Despite the fact that KIRK's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.05 is high and demonstrates strong liquidity.
  • KIRK's revenue growth has slightly outpaced the industry average of 6.2%. Since the same quarter one year prior, revenues slightly increased by 0.2%. 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.
  • The gross profit margin for KIRKLAND'S INC is currently lower than what is desirable, coming in at 34.40%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -0.50% trails that of the industry average.
  • Net operating cash flow has significantly decreased to -$7.67 million or 287.95% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

Kirkland's, Inc. operates as a specialty retailer of home decor and gifts in the United States. The company has a P/E ratio of 7.5, equal to the average retail industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Kirkland's has a market cap of $166.5 million and is part of the services sector and retail industry. Shares are down 37.1% year to date as of the close of trading on Tuesday.

You can view the full Kirkland's Ratings Report or get investment ideas from our investment research center.
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