NEW YORK ( TheStreet) -- Lakeland Industries (Nasdaq: LAKE) has been downgraded by TheStreet Ratings from buy 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 also find weaknesses including weak operating cash flow, a generally disappointing performance in the stock itself and poor profit margins.

Highlights from the ratings report include:
  • LAKE's revenue growth has slightly outpaced the industry average of 0.9%. Since the same quarter one year prior, revenues slightly increased by 1.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Although LAKE's debt-to-equity ratio of 0.23 is very low, it is currently higher than that of the industry average. To add to this, LAKE has a quick ratio of 2.10, which demonstrates the ability of the company to cover short-term liquidity needs.
  • LAKELAND INDUSTRIES INC reported significant earnings per share improvement 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, LAKELAND INDUSTRIES INC reported lower earnings of $0.17 versus $0.19 in the prior year. This year, the market expects an improvement in earnings ($0.93 versus $0.17).
  • LAKE has underperformed the S&P 500 Index, declining 10.24% 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.
  • Net operating cash flow has significantly decreased to -$3.63 million or 168.86% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

Lakeland Industries, Inc. manufactures and sells safety garments and accessories for the industrial protective clothing market primarily in North America, China, India, and Brazil. The company has a P/E ratio of 12.9, below the average health services industry P/E ratio of 13.1 and below the S&P 500 P/E ratio of 17.7. Lakeland has a market cap of $43.8 million and is part of the health care sector and health services industry. Shares are down 8.2% year to date as of the close of trading on Thursday.

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