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NEW YORK ( TheStreet) -- Big five Sporting Goods Corporation (Nasdaq: BGFV) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and poor profit margins.

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Highlights from the ratings report include:
  • BGFV's revenue growth has slightly outpaced the industry average of 7.2%. Since the same quarter one year prior, revenues slightly increased by 1.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • BGFV's debt-to-equity ratio is very low at 0.24 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.15 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • The gross profit margin for BIG five SPORTING GOODS CORP is currently lower than what is desirable, coming in at 34.71%. Regardless of BGFV'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 2.09% trails the industry average.
  • Net operating cash flow has significantly decreased to $1.11 million or 89.99% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

Big five Sporting Goods Corporation operates as a sporting goods retailer in the western United States. Big five Sporting Goods has a market cap of $337.3 million and is part of the services sector and specialty retail industry. Shares are down 25% year to date as of the close of trading on Tuesday.

You can view the full Big five Sporting Goods Ratings Report or get investment ideas from our investment research center.

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