Avalon Holdings Corp Stock Upgraded (AWX)

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) -- Avalon Holdings (AMEX: AWX) 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 good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

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Highlights from the ratings report include:
  • AWX's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.44, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has slightly increased to $1.32 million or 4.10% when compared to the same quarter last year. In addition, AVALON HOLDINGS CORP has also modestly surpassed the industry average cash flow growth rate of -5.48%.
  • AVALON HOLDINGS CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past two years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, AVALON HOLDINGS CORP turned its bottom line around by earning $0.10 versus -$0.09 in the prior year.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Commercial Services & Supplies industry and the overall market, AVALON HOLDINGS CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Commercial Services & Supplies industry. The net income has significantly decreased by 119.2% when compared to the same quarter one year ago, falling from $0.46 million to -$0.09 million.

Avalon Holdings Corporation, through its subsidiaries, provides waste management services. The company operates through Waste Management Services, and Golf and Related Operations segments. Avalon has a market cap of $14 million and is part of the industrial goods sector and materials & construction industry. Shares are down 15.4% year to date as of the close of trading on Friday.

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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