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"We rate REGIS CORP/MN (RGS) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, increase in stock price during the past year and largely solid financial position with reasonable debt levels by most measures. 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 analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has significantly increased by 367.54% to $33.69 million when compared to the same quarter last year. In addition, REGIS CORP/MN has also vastly surpassed the industry average cash flow growth rate of -3.80%.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
- RGS, with its decline in revenue, underperformed when compared the industry average of 6.8%. Since the same quarter one year prior, revenues slightly dropped by 3.6%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Diversified Consumer Services industry and the overall market, REGIS CORP/MN's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for REGIS CORP/MN is currently extremely low, coming in at 14.73%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -3.51% is significantly below that of the industry average.
- You can view the full analysis from the report here: RGS Ratings Report