Rocky Brands Inc. Stock Downgraded (RCKY)

Editor's Note: 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

NEW YORK ( TheStreet) -- Rocky Brands (Nasdaq: RCKY) 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 good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:
  • Although RCKY's debt-to-equity ratio of 0.25 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 2.80, which clearly demonstrates the ability to cover short-term cash needs.
  • ROCKY BRANDS 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. 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, ROCKY BRANDS INC increased its bottom line by earning $1.11 versus $1.02 in the prior year. This year, the market expects an improvement in earnings ($1.52 versus $1.11).
  • 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 Textiles, Apparel & Luxury Goods industry. The net income has significantly decreased by 90.4% when compared to the same quarter one year ago, falling from $2.28 million to $0.22 million.
  • 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. In comparison to the other companies in the Textiles, Apparel & Luxury Goods industry and the overall market, ROCKY BRANDS INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.

Rocky Brands, Inc., together with its subsidiaries, designs, manufactures, and markets footwear and apparel under the Rocky, Georgia Boot, Durango, Lehigh, Mossy Oak, and Michelin brand names. The company has a P/E ratio of 13.2, equal to the average consumer non-durables industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Rocky has a market cap of $85.6 million and is part of the consumer goods sector and consumer non-durables industry. Shares are up 24.7% year to date as of the close of trading on Tuesday.

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

-- Written by a member of TheStreet Ratings Staff
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