NEW YORK ( TheStreet) -- Outdoors Channel Holdings (Nasdaq: OUTD) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins, good cash flow from operations, notable return on equity and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- OUTD has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 4.90, which clearly demonstrates the ability to cover short-term cash needs.
- OUTDOOR CHANNEL HLDGS INC reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, OUTDOOR CHANNEL HLDGS INC increased its bottom line by earning $0.08 versus $0.05 in the prior year. This year, the market expects an improvement in earnings ($0.12 versus $0.08).
- The gross profit margin for OUTDOOR CHANNEL HLDGS INC is rather high; currently it is at 61.40%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 6.20% trails the industry average.
- Net operating cash flow has slightly increased to $5.23 million or 7.16% when compared to the same quarter last year. Despite an increase in cash flow, OUTDOOR CHANNEL HLDGS INC's cash flow growth rate is still lower than the industry average growth rate of 20.85%.
- OUTD, with its decline in revenue, underperformed when compared the industry average of 19.7%. Since the same quarter one year prior, revenues slightly dropped by 8.5%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.
-- Written by a member of TheStreet RatingsStaff