NEW YORK ( TheStreet) -- Le Gaga Holdings (Nasdaq: GAGA) has been upgraded by TheStreet Ratings from sell 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 notable return on equity. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year. Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 25.0%. Since the same quarter one year prior, revenues rose by 47.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Although GAGA's debt-to-equity ratio of 0.05 is very low, it is currently higher than that of the industry average.
- The gross profit margin for LE GAGA HOLDINGS LTD -ADR is currently very high, coming in at 75.30%. Regardless of GAGA's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, GAGA's net profit margin of 44.30% significantly outperformed against the industry.
- GAGA's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 42.05%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
-- Written by a member of TheStreet RatingsStaff