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) -- Vera Bradley (Nasdaq: VRA) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
- 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.
- Net operating cash flow has significantly increased by 343.23% to $7.84 million when compared to the same quarter last year. In addition, VERA BRADLEY INC has also vastly surpassed the industry average cash flow growth rate of -41.05%.
- VRA has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.97 is somewhat weak and could be cause for future problems.
- The gross profit margin for VERA BRADLEY INC is rather high; currently it is at 58.26%. Regardless of VRA's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, VRA's net profit margin of 11.70% compares favorably to the industry average.
- VRA, with its decline in revenue, underperformed when compared the industry average of 16.6%. Since the same quarter one year prior, revenues slightly dropped by 6.0%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.