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NEW YORK (TheStreet) -- Virco Manufacturing (VIRC - Get Report) has been downgraded by TheStreet Ratings from Hold to Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate VIRCO MFG. CORP (VIRC) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its weak operating cash flow, unimpressive growth in net income and generally high debt management risk."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has significantly decreased to -$11.93 million or 60.95% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Even though the current debt-to-equity ratio is 1.13, it is still below the industry average, suggesting that this level of debt is acceptable within the Commercial Services & Supplies industry. Despite the fact that VIRC's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.52 is low and demonstrates weak liquidity.
- The change in net income from the same quarter one year ago has exceeded that of the Commercial Services & Supplies industry average, but is less than that of the S&P 500. The net income has decreased by 16.2% when compared to the same quarter one year ago, dropping from $6.21 million to $5.20 million.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Commercial Services & Supplies industry and the overall market, VIRCO MFG. CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- VIRC, with its decline in revenue, underperformed when compared the industry average of 8.4%. Since the same quarter one year prior, revenues slightly dropped by 6.6%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- You can view the full analysis from the report here: VIRC Ratings Report