NEW YORK ( TheStreet) -- United Continental Holdings (NYSE: UAL) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including generally poor debt management, poor profit margins and a generally disappointing performance in the stock itself. Highlights from the ratings report include:
- UAL's revenue growth has slightly outpaced the industry average of 3.3%. Since the same quarter one year prior, revenues slightly increased by 5.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
- UNITED CONTINENTAL HLDGS 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. This trend suggests that the performance of the business is improving. During the past fiscal year, UNITED CONTINENTAL HLDGS INC increased its bottom line by earning $2.01 versus $1.54 in the prior year. This year, the market expects an improvement in earnings ($4.10 versus $2.01).
- Net operating cash flow has significantly increased by 150.00% to $265.00 million when compared to the same quarter last year. Despite an increase in cash flow of 150.00%, UNITED CONTINENTAL HLDGS INC is still growing at a significantly lower rate than the industry average of 1108.58%.
- The gross profit margin for UNITED CONTINENTAL HLDGS INC is rather low; currently it is at 20.70%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -1.50% trails that of the industry average.
- The debt-to-equity ratio is very high at 7.05 and currently higher than the industry average, implying that there is very poor management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, UAL maintains a poor quick ratio of 0.80, which illustrates the inability to avoid short-term cash problems.
-- Written by a member of TheStreet Ratings Staff