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NEW YORK (TheStreet) -- Sally Beauty Holdings (SBH) has been upgraded by TheStreet Ratings from Hold to Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate SALLY BEAUTY HOLDINGS INC (SBH) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in stock price during the past year and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
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Highlights from the analysis by TheStreet Ratings Team goes as follows:
- SBH's revenue growth has slightly outpaced the industry average of 1.5%. Since the same quarter one year prior, revenues slightly increased by 4.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- SALLY BEAUTY HOLDINGS INC reported flat earnings per share in the most recent quarter. 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, SALLY BEAUTY HOLDINGS INC increased its bottom line by earning $1.48 versus $1.23 in the prior year. This year, the market expects an improvement in earnings ($1.53 versus $1.48).
- 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, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
- The gross profit margin for SALLY BEAUTY HOLDINGS INC is rather high; currently it is at 50.11%. SBH has managed to maintain the strong profit margin since the same quarter of last year. Despite the mixed results of the gross profit margin, the net profit margin of 7.13% trails the industry average.
- Net operating cash flow has decreased to $34.56 million or 43.30% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: SBH Ratings Report