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) -- McClatchy Company (NYSE: MNI) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and generally higher debt management risk.
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- Powered by its strong earnings growth of 140.00% and other important driving factors, this stock has surged by 167.05% over the past year, outperforming the rise in the S&P 500 Index during the same period. Although MNI had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
- MCCLATCHY CO reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, MCCLATCHY CO increased its bottom line by earning $0.21 versus $0.00 in the prior year. This year, the market expects an improvement in earnings ($0.33 versus $0.21).
- The gross profit margin for MCCLATCHY CO is rather high; currently it is at 60.64%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 3.63% trails the industry average.
- The debt-to-equity ratio is very high at 6.33 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, MNI's quick ratio is somewhat strong at 1.04, demonstrating the ability to handle short-term liquidity needs.
- Net operating cash flow has decreased to $41.42 million or 13.09% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, MCCLATCHY CO has marginally lower results.