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) -- 1-800 Flowers.com (Nasdaq: FLWS) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share and revenue growth. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and generally higher debt management risk.
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- The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- 1-800-FLOWERS.COM has improved earnings per share by 12.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, 1-800-FLOWERS.COM increased its bottom line by earning $0.19 versus $0.07 in the prior year. This year, the market expects an improvement in earnings ($0.23 versus $0.19).
- Net operating cash flow has slightly increased to -$49.61 million or 5.51% when compared to the same quarter last year. Despite an increase in cash flow, 1-800-FLOWERS.COM's cash flow growth rate is still lower than the industry average growth rate of 17.84%.
- Despite currently having a low debt-to-equity ratio of 0.40, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.28 is very low and demonstrates very weak liquidity.
- 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 Internet & Catalog Retail industry. The net income has significantly decreased by 522.4% when compared to the same quarter one year ago, falling from -$0.74 million to -$4.61 million.
-- Written by a member of TheStreet Ratings Staff