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) -- Cherokee (Nasdaq: CHKE) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in stock price during the past year, compelling growth in net income, expanding profit margins and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.
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- CHKE's revenue growth has slightly outpaced the industry average of 14.7%. Since the same quarter one year prior, revenues rose by 23.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Textiles, Apparel & Luxury Goods industry. The net income increased by 121.5% when compared to the same quarter one year prior, rising from $1.62 million to $3.59 million.
- The gross profit margin for CHEROKEE INC/DE is rather high; currently it is at 51.87%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 36.06% significantly outperformed against the industry average.
- CHEROKEE INC/DE reported significant earnings per share improvement 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, CHEROKEE INC/DE reported lower earnings of $0.72 versus $0.82 in the prior year. This year, the market expects an improvement in earnings ($1.06 versus $0.72).