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"We rate HOMEINNS HOTEL GROUP (HMIN) 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 revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 7.9%. Since the same quarter one year prior, revenues slightly increased by 7.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- HOMEINNS HOTEL GROUP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, HOMEINNS HOTEL GROUP turned its bottom line around by earning $0.63 versus -$0.10 in the prior year. This year, the market expects an improvement in earnings ($10.97 versus $0.63).
- HMIN's debt-to-equity ratio is very low at 0.21 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Despite the fact that HMIN's debt-to-equity ratio is low, the quick ratio, which is currently 0.52, displays a potential problem in covering short-term cash needs.
- The gross profit margin for HOMEINNS HOTEL GROUP is currently lower than what is desirable, coming in at 33.25%. Regardless of HMIN's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, HMIN's net profit margin of 13.91% compares favorably to the industry average.
- HMIN has underperformed the S&P 500 Index, declining 22.62% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- You can view the full analysis from the report here: HMIN Ratings Report
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