Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link. NEW YORK ( TheStreet) -- Emmis Communications (Nasdaq: EMMS) 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, revenue growth and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and poor profit margins.
- 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.
- Compared to other companies in the Media industry and the overall market, EMMIS COMMUNICATIONS CP's return on equity significantly exceeds that of both the industry average and the S&P 500.
- EMMS's revenue growth has slightly outpaced the industry average of 2.3%. Since the same quarter one year prior, revenues slightly increased by 3.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- EMMIS COMMUNICATIONS CP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past two years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, EMMIS COMMUNICATIONS CP swung to a loss, reporting -$0.21 versus $0.57 in the prior year.
- The gross profit margin for EMMIS COMMUNICATIONS CP is currently lower than what is desirable, coming in at 26.74%. Regardless of EMMS'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 8.12% trails the industry average.
- The debt-to-equity ratio is very high at 55.57 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, EMMS maintains a poor quick ratio of 0.94, which illustrates the inability to avoid short-term cash problems.