NEW YORK ( TheStreet) -- Quality Distribution (Nasdaq: QLTY) has been downgraded by TheStreet Ratings from hold to sell. Among the areas we feel are negative, one of the most important has been poor profit margins.

Highlights from the ratings report include:
  • The gross profit margin for QUALITY DISTRIBUTION INC is currently extremely low, coming in at 12.80%. Regardless of QLTY's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, QLTY's net profit margin of 4.80% is significantly lower than the same period one year prior.
  • Net operating cash flow has significantly increased by 440.30% to $6.74 million when compared to the same quarter last year. In addition, QUALITY DISTRIBUTION INC has also vastly surpassed the industry average cash flow growth rate of 30.19%.
  • QUALITY DISTRIBUTION 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 year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, QUALITY DISTRIBUTION INC continued to lose money by earning -$0.36 versus -$9.32 in the prior year. This year, the market expects an improvement in earnings ($0.68 versus -$0.36).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Road & Rail industry. The net income increased by 340.0% when compared to the same quarter one year prior, rising from $2.06 million to $9.05 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 16.0%. Since the same quarter one year prior, revenues slightly increased by 7.0%. Growth in the company's revenue appears to have helped boost the earnings per share.

Quality Distribution, Inc., together with its subsidiaries, engages in the truckload transportation of bulk chemicals primarily in North America. The company involves in the bulk transportation of liquid and dry chemicals, including plastics, as well as bulk dry and liquid food-grade products. Quality Distribution has a market cap of $228.2 million and is part of the services sector and transportation industry. Shares are up 7.7% year to date as of the close of trading on Monday.

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