NEW YORK ( TheStreet) -- Stanley Furniture Company (Nasdaq: STLY) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and notable return on equity. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and poor profit margins.
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- STANLEY FURNITURE CO 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, STANLEY FURNITURE CO INC continued to lose money by earning -$0.35 versus -$4.17 in the prior year. This year, the market expects an improvement in earnings (-$0.28 versus -$0.35).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Household Durables industry. The net income increased by 6294.9% when compared to the same quarter one year prior, rising from -$0.60 million to $36.86 million.
- Despite the weak revenue results, STLY has outperformed against the industry average of 29.2%. Since the same quarter one year prior, revenues fell by 10.8%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- The gross profit margin for STANLEY FURNITURE CO INC is rather low; currently it is at 16.50%. Regardless of STLY's low profit margin, it has managed to increase from the same period last year.
- In its most recent trading session, STLY has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
-- Written by a member of TheStreet Ratings Staff