NEW YORK ( TheStreet) -- Comstock Homebuilding Companies (Nasdaq: CHCI) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and notable return on equity. However, as a counter to these strengths, we also find weaknesses including generally poor debt management and poor profit margins. Highlights from the ratings report include:
- COMSTOCK HOMEBUILDING COS 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 two years. During the past fiscal year, COMSTOCK HOMEBUILDING COS continued to lose money by earning -$0.41 versus -$0.96 in the prior year.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Household Durables industry. The net income increased by 290.8% when compared to the same quarter one year prior, rising from -$3.43 million to $6.54 million.
- After a year of stock price fluctuations, the net result is that CHCI's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- The gross profit margin for COMSTOCK HOMEBUILDING COS is currently extremely low, coming in at 4.80%. Despite the low profit margin, it has increased significantly from the same period last year.
- The debt-to-equity ratio is very high at 2.52 and currently higher than the industry average, implying that there is very poor management of debt levels within the company.