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) -- Lakeland Industries (Nasdaq: LAKE) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, generally disappointing historical performance in the stock itself, poor profit margins and feeble growth in its earnings per share.
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- 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 Textiles, Apparel & Luxury Goods industry and the overall market, LAKELAND INDUSTRIES INC's return on equity significantly trails that of both the industry average and the S&P 500.
- LAKE's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 26.76%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- The gross profit margin for LAKELAND INDUSTRIES INC is currently lower than what is desirable, coming in at 31.90%. Regardless of LAKE'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 7.00% trails the industry average.
- LAKELAND INDUSTRIES 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. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, LAKELAND INDUSTRIES INC reported lower earnings of $0.21 versus $0.25 in the prior year. For the next year, the market is expecting a contraction of 76.2% in earnings ($0.05 versus $0.21).
- LAKE, with its decline in revenue, underperformed when compared the industry average of 6.6%. Since the same quarter one year prior, revenues slightly dropped by 9.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
-- Written by a member of TheStreet Ratings Staff