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) -- Stanley Furniture Company (Nasdaq: STLY) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its notable return on equity and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and weak operating cash flow.
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- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Household Durables industry and the overall market, STANLEY FURNITURE CO INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- Despite the weak revenue results, STLY has outperformed against the industry average of 28.2%. Since the same quarter one year prior, revenues slightly dropped by 2.7%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- The gross profit margin for STANLEY FURNITURE CO INC is currently extremely low, coming in at 14.70%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -8.03% is significantly below that of the industry average.
- Net operating cash flow has significantly decreased to -$7.03 million or 119.45% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
-- Written by a member of TheStreet Ratings Staff