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) -- Francescas Holdings (Nasdaq: FRAN) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, 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 unimpressive growth in net income, weak operating cash flow and a generally disappointing performance in the stock itself.
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- The revenue growth came in higher than the industry average of 7.2%. Since the same quarter one year prior, revenues rose by 10.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The current debt-to-equity ratio, 0.33, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, FRAN has a quick ratio of 2.20, which demonstrates the ability of the company to cover short-term liquidity needs.
- FRANCESCAS HOLDINGS CORP's earnings per share declined by 16.7% 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, FRANCESCAS HOLDINGS CORP increased its bottom line by earning $1.05 versus $0.52 in the prior year. This year, the market expects an improvement in earnings ($1.06 versus $1.05).
- Net operating cash flow has decreased to $7.33 million or 30.12% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, FRANCESCAS HOLDINGS CORP has marginally lower results.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Specialty Retail industry. The net income has decreased by 19.7% when compared to the same quarter one year ago, dropping from $10.80 million to $8.67 million.