NEW YORK ( TheStreet) -- Lakes Entertainment (Nasdaq: LACO) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we find that the company's return on equity has been disappointing. Highlights from the ratings report include:
- LACO's very impressive revenue growth greatly exceeded the industry average of 4.9%. Since the same quarter one year prior, revenues leaped by 486.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- LACO has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 6.06, which clearly demonstrates the ability to cover short-term cash needs.
- LAKES ENTERTAINMENT INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past two years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, LAKES ENTERTAINMENT INC swung to a loss, reporting -$0.53 versus $0.15 in the prior year.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, LAKES ENTERTAINMENT INC's return on equity significantly trails that of both the industry average and the S&P 500.