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 . Among the primary strengths of the company is its solid financial position based on a variety of debt and liquidity measures that we have evaluated. At the same time, however, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.
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- SPLS's debt-to-equity ratio is very low at 0.27 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.77 is somewhat weak and could be cause for future problems.
- SPLS, with its decline in revenue, underperformed when compared the industry average of 22.2%. Since the same quarter one year prior, revenues slightly dropped by 2.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- STAPLES INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, STAPLES INC increased its bottom line by earning $1.41 versus $1.22 in the prior year. For the next year, the market is expecting a contraction of 2.1% in earnings ($1.38 versus $1.41).
- The gross profit margin for STAPLES INC is currently lower than what is desirable, coming in at 29.20%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -9.38% is significantly below that of the industry average.
- Net operating cash flow has decreased to $637.97 million or 19.59% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
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