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) -- Books-A-Million (Nasdaq: BAMM) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income and good cash flow from operations. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.
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- BAMM's revenue growth has slightly outpaced the industry average of 12.9%. Since the same quarter one year prior, revenues rose by 14.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Specialty Retail industry. The net income increased by 69.6% when compared to the same quarter one year prior, rising from -$2.90 million to -$0.88 million.
- The current debt-to-equity ratio, 0.31, is low and is below the industry average, implying that there has been successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.05 is very weak and demonstrates a lack of ability to pay short-term obligations.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Specialty Retail industry and the overall market, BOOKS-A-MILLION INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for BOOKS-A-MILLION INC is currently lower than what is desirable, coming in at 27.90%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -0.70% trails that of the industry average.
-- Written by a member of TheStreet Ratings Staff