NEW YORK ( TheStreet) -- Delta Apparel (AMEX: DLA) 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, solid stock price performance and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and poor profit margins.

Highlights from the ratings report include:
  • DLA's revenue growth has slightly outpaced the industry average of 12.7%. Since the same quarter one year prior, revenues rose by 14.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 163.15% and other important driving factors, this stock has surged by 33.70% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • DLA's debt-to-equity ratio of 0.72 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.88 is weak.
  • The gross profit margin for DELTA APPAREL INC is currently lower than what is desirable, coming in at 26.80%. Regardless of DLA's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 3.60% trails the industry average.
  • Net operating cash flow has significantly decreased to -$16.61 million or 582.70% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

Delta Apparel, Inc., through its subsidiaries, operates as an international design, marketing, manufacturing, and sourcing company that features a portfolio of branded and private label activewear apparel and headwear. The company has a P/E ratio of 7.3, equal to the average consumer non-durables industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Delta has a market cap of $142.6 million and is part of the consumer goods sector and consumer non-durables industry. Shares are up 24% year to date as of the close of trading on Tuesday.

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