NEW YORK ( TheStreet) -- Perry Ellis International (Nasdaq: PERY) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, attractive valuation levels and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 12.6%. Since the same quarter one year prior, revenues rose by 23.4%. 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.
- ELLIS PERRY INTL INC's earnings per share declined by 21.6% 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, ELLIS PERRY INTL INC increased its bottom line by earning $1.71 versus $0.99 in the prior year. This year, the market expects an improvement in earnings ($2.51 versus $1.71).
- Despite currently having a low debt-to-equity ratio of 0.52, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.36 is sturdy.
- Looking at the price performance of PERY's shares over the past 12 months, there is not much good news to report: the stock is down 41.58%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier quarter. Looking ahead, the stock's sharp decline over the past year may have been what was needed in order to bring its value into alignment with its fundamentals and others in its industry.