NEW YORK ( TheStreet) -- Lannett Incorporated (AMEX: LCI) has been upgraded by TheStreet Ratings from sell to hold. Among the primary strengths of the company is its solid financial position based on a variety of debt and liquidity measures that we have evaluated. At the same time, however, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins. Highlights from the ratings report include:
- LCI's debt-to-equity ratio is very low at 0.07 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, LCI has a quick ratio of 1.77, which demonstrates the ability of the company to cover short-term liquidity needs.
- LCI, with its decline in revenue, underperformed when compared the industry average of 8.1%. Since the same quarter one year prior, revenues fell by 21.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- LANNETT CO INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, LANNETT CO INC swung to a loss, reporting -$0.01 versus $0.30 in the prior year. This year, the market expects an improvement in earnings ($0.15 versus -$0.01).
- The gross profit margin for LANNETT CO INC is rather low; currently it is at 22.60%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -7.10% is significantly below that of the industry average.
- Net operating cash flow has significantly decreased to -$1.58 million or 130.61% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.