NEW YORK ( TheStreet) -- Saks Incorporated (NYSE: SKS) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, compelling growth in net income, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself. Highlights from the ratings report include:
- SKS's revenue growth has slightly outpaced the industry average of 2.2%. Since the same quarter one year prior, revenues slightly increased by 6.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- SAKS 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 two years. We feel that this trend should continue. During the past fiscal year, SAKS INC increased its bottom line by earning $0.43 versus $0.24 in the prior year. This year, the market expects an improvement in earnings ($0.50 versus $0.43).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Multiline Retail industry. The net income increased by 48.0% when compared to the same quarter one year prior, rising from $24.98 million to $36.98 million.
- The current debt-to-equity ratio, 0.31, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that SKS's debt-to-equity ratio is low, the quick ratio, which is currently 0.50, displays a potential problem in covering short-term cash needs.
- 37.60% is the gross profit margin for SAKS INC which we consider to be strong. Regardless of SKS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SKS's net profit margin of 4.00% compares favorably to the industry average.
-- Written by a member of TheStreet RatingsStaff