Escalade Inc. Stock Upgraded (ESCA)

NEW YORK ( TheStreet) -- Escalade (Nasdaq: ESCA) 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 and attractive valuation levels. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 0.9%. Since the same quarter one year prior, revenues rose by 17.6%. 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.
  • The gross profit margin for ESCALADE INC is currently lower than what is desirable, coming in at 27.60%. Regardless of ESCA'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 5.80% trails the industry average.
  • Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, ESCA has underperformed the S&P 500 Index, declining 14.01% from its price level of one year ago. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
  • ESCALADE INC's earnings per share declined by 5.9% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern earnings per share over the past two years. During the past fiscal year, ESCALADE INC reported lower earnings of $0.33 versus $0.46 in the prior year.
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Escalade, Incorporated engages in the manufacture and sale of sporting goods, and information security and print finishing solutions primarily in the United States, Mexico, Europe, and Asia. The company has a P/E ratio of 14.1, above the average consumer durables industry P/E ratio of 13.3 and below the S&P 500 P/E ratio of 17.7. Escalade has a market cap of $58.1 million and is part of the consumer goods sector and consumer durables industry. Shares are up 19.2% year to date as of the close of trading on Monday.

You can view the full Escalade Ratings Report or get investment ideas from our investment research center.
-- Written by a member of TheStreet RatingsStaff
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