Rating Change #6

Red Lion Hotels Corporation ( RLH) 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 and generally disappointing historical performance in the stock itself.

  • EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.

Highlights from the ratings report include:
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, RED LION HOTELS CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • RLH has underperformed the S&P 500 Index, declining 6.80% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • RLH, with its decline in revenue, slightly underperformed the industry average of 2.7%. Since the same quarter one year prior, revenues slightly dropped by 3.2%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The current debt-to-equity ratio, 0.52, is low and is below the industry average, implying that there has been successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.28 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • RED LION HOTELS CORP 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, RED LION HOTELS CORP reported poor results of -$0.54 versus -$0.30 in the prior year. This year, the market expects an improvement in earnings (-$0.15 versus -$0.54).
.

Red Lion Hotels Corporation, a hospitality and leisure company, engages in the ownership, operation, and franchising of midscale, full, select, and limited service hotels under the Red Lion brand. Red Lion Hotels has a market cap of $133.5 million and is part of the services sector and leisure industry. Shares are down 11.3% year to date as of the close of trading on Wednesday.

You can view the full Red Lion Hotels Ratings Report or get investment ideas from our investment research center.

If you liked this article you might like

Stick to Small, Fast Trades Until the Fed's out of the Way

These 5 Stocks Under $10 Could Light Up Soon

5 Stocks Insiders Love Right Now

BioScrip (BIOS) Stock: Weak On High Volume Today

5 Stocks Under $10 Set to Soar