Rating Change #7
Ralcorp Holdings Incorporated (RAH) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth 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.
Highlights from the ratings report include:
- RAH's revenue growth trails the industry average of 23.6%. Since the same quarter one year prior, revenues slightly increased by 8.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Compared to its closing price of one year ago, RAH's share price has jumped by 32.28%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- The gross profit margin for RALCORP HOLDINGS INC is currently lower than what is desirable, coming in at 27.20%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -30.30% is significantly below that of the industry average.
- 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 Food Products industry. The net income has significantly decreased by 983.3% when compared to the same quarter one year ago, falling from $41.90 million to -$370.10 million.
Ralcorp Holdings, Inc. engages in manufacturing, distributing, and marketing private-brand food products, ready-to-eat cereal products, and other regional and value-brand food products. Ralcorp has a market cap of $4.64 billion and is part of the consumer goods sector and food & beverage industry. Shares are up 32.3% year to date as of the close of trading on Thursday.You can view the full Ralcorp Ratings Report or get investment ideas from our investment research center.