NEW YORK ( TheStreet) -- DryShips (Nasdaq: DRYS) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally poor debt management and disappointing return on equity. Highlights from the ratings report include:
- DRYS's revenue growth trails the industry average of 65.9%. Since the same quarter one year prior, revenues rose by 41.0%. 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.
- Net operating cash flow has increased to $159.65 million or 28.33% when compared to the same quarter last year. In addition, DRYSHIPS INC has also vastly surpassed the industry average cash flow growth rate of -79.63%.
- The gross profit margin for DRYSHIPS INC is rather high; currently it is at 65.70%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, DRYS's net profit margin of 7.90% compares favorably to the industry average.
- The debt-to-equity ratio of 1.33 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, DRYS maintains a poor quick ratio of 0.93, which illustrates the inability to avoid short-term cash problems.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Marine industry and the overall market on the basis of return on equity, DRYSHIPS INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
-- Written by a member of TheStreet RatingsStaff