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) -- Hawaiian Holdings (Nasdaq: HA) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and poor profit margins.
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- The revenue growth came in higher than the industry average of 0.5%. Since the same quarter one year prior, revenues rose by 20.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Airlines industry and the overall market, HAWAIIAN HOLDINGS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- HAWAIIAN HOLDINGS INC reported significant earnings per share improvement in the most recent quarter compared to 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, HAWAIIAN HOLDINGS INC swung to a loss, reporting -$0.07 versus $2.12 in the prior year. This year, the market expects an improvement in earnings ($1.31 versus -$0.07).
- The gross profit margin for HAWAIIAN HOLDINGS INC is currently lower than what is desirable, coming in at 30.80%. Regardless of HA's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 8.30% trails the industry average.
- The debt-to-equity ratio is very high at 2.35 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, HA maintains a poor quick ratio of 0.92, which illustrates the inability to avoid short-term cash problems.
-- Written by a member of TheStreet Ratings Staff