NEW YORK ( TheStreet) -- Speedway Motor Sports (NYSE: TRK) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its increase in net income, solid stock price performance and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and weak operating cash flow.
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- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income increased by 90.4% when compared to the same quarter one year prior, rising from -$1.52 million to -$0.15 million.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- SPEEDWAY MOTORSPORTS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. 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, SPEEDWAY MOTORSPORTS INC swung to a loss, reporting -$0.13 versus $1.06 in the prior year. This year, the market expects an improvement in earnings ($1.09 versus -$0.13).
- Net operating cash flow has decreased to $29.06 million or 35.68% when compared to the same quarter last year. Despite a decrease in cash flow SPEEDWAY MOTORSPORTS INC is still fairing well by exceeding its industry average cash flow growth rate of -77.15%.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, SPEEDWAY MOTORSPORTS INC's return on equity significantly trails that of both the industry average and the S&P 500.
-- Written by a member of TheStreet Ratings Staff