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) -- Joe's Jeans (Nasdaq: JOEZ) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.
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- JOEZ's debt-to-equity ratio is very low at 0.05 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 0.95 is somewhat weak and could be cause for future problems.
- 43.71% is the gross profit margin for JOE'S JEANS INC which we consider to be strong. Regardless of JOEZ's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, JOEZ's net profit margin of -0.97% significantly underperformed when compared to the industry average.
- Net operating cash flow has significantly decreased to $2.17 million or 60.82% 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.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Textiles, Apparel & Luxury Goods industry and the overall market, JOE'S JEANS INC's return on equity significantly trails that of both the industry average and the S&P 500.