Kirkland's Inc. Stock Downgraded (KIRK)

NEW YORK ( TheStreet) -- Kirkland's (Nasdaq: KIRK) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and revenue growth. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and weak operating cash flow.

Highlights from the ratings report include:
  • Despite the fact that KIRK's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.89 is high and demonstrates strong liquidity.
  • 39.30% is the gross profit margin for KIRKLAND'S INC which we consider to be strong. Regardless of KIRK's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 2.00% trails the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Specialty Retail industry. The net income has significantly decreased by 38.3% when compared to the same quarter one year ago, falling from $3.17 million to $1.96 million.
  • Net operating cash flow has significantly decreased to -$2.73 million or 232.66% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

Kirkland's, Inc. operates as a specialty retailer of home decor and gifts in the United States. The company has a P/E ratio of 12.9, equal to the average retail industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Kirkland's has a market cap of $211.5 million and is part of the services sector and retail industry. Shares are down 18.2% year to date as of the close of trading on Thursday.

You can view the full Kirkland's Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
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