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) -- Staples (Nasdaq: SPLS) has been reiterated by TheStreet Ratings as a hold with a ratings score of C . The company's strengths can be seen in multiple areas, such as its attractive valuation levels, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, poor profit margins and a generally disappointing performance in the stock itself.
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- Net operating cash flow has increased to $109.92 million or 19.61% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -21.12%.
- The current debt-to-equity ratio, 0.30, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.72 is somewhat weak and could be cause for future problems.
- 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 Specialty Retail industry. The net income has significantly decreased by 31.7% when compared to the same quarter one year ago, falling from $176.44 million to $120.43 million.
- The gross profit margin for STAPLES INC is currently lower than what is desirable, coming in at 27.80%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 2.20% trails that of the industry average.
--Written by a member of TheStreet Ratings Staff.FREE from Real Money's Jim Cramer: Winners and Losers Election 2012 - Steps to take NOW so you can profit no matter who is in charge! Free Download Now