NEW YORK ( TheStreet) -- Home Inns & Hotels Management (Nasdaq: HMIN) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and increase in net income. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, disappointing return on equity and poor profit margins. Highlights from the ratings report include:
- HMIN's very impressive revenue growth greatly exceeded the industry average of 14.0%. Since the same quarter one year prior, revenues leaped by 69.7%. 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.
- HMIN's debt-to-equity ratio of 0.67 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 1.00 is sturdy.
- The company, on the basis of net income growth from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Hotels, Restaurants & Leisure industry average. The net income increased by 3.2% when compared to the same quarter one year prior, going from $5.68 million to $5.86 million.
- 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. In comparison to the other companies in the Hotels, Restaurants & Leisure industry and the overall market, HOME INNS & HOTELS MNGT's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- The gross profit margin for HOME INNS & HOTELS MNGT is rather low; currently it is at 23.10%. It has decreased significantly from the same period last year. Along with this, the net profit margin of 2.90% significantly trails the industry average.
-- Written by a member of TheStreet Ratings Staff