NEW YORK ( TheStreet) -- Schawk (NYSE: SGK) 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, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and deteriorating net income.
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- SGK's revenue growth trails the industry average of 29.5%. Since the same quarter one year prior, revenues slightly increased by 2.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The current debt-to-equity ratio, 0.34, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.27, which illustrates the ability to avoid short-term cash problems.
- 38.40% is the gross profit margin for SCHAWK INC which we consider to be strong. Regardless of SGK'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 -1.30% trails the industry average.
- SCHAWK INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, SCHAWK INC reported lower earnings of $0.79 versus $1.25 in the prior year. For the next year, the market is expecting a contraction of 1.3% in earnings ($0.78 versus $0.79).
- 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 Commercial Services & Supplies industry. The net income has significantly decreased by 137.8% when compared to the same quarter one year ago, falling from $3.96 million to -$1.50 million.
-- Written by a member of TheStreet Ratings Staff