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) -- Bon-Ton Stores (Nasdaq: BONT) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity.
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- Compared to its closing price of one year ago, BONT's share price has jumped by 109.93%, exceeding the performance of the broader market during that same time frame. Although BONT had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
- Net operating cash flow has increased to $67.19 million or 29.08% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -13.28%.
- 37.30% is the gross profit margin for BON-TON STORES INC which we consider to be strong. Regardless of BONT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, BONT's net profit margin of -7.40% significantly underperformed when compared to the industry average.
- The debt-to-equity ratio is very high at 18.74 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.09, which clearly demonstrates the inability to cover short-term cash needs.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Multiline Retail industry and the overall market, BON-TON STORES 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