Rating Change #2
Ralcorp Holdings Incorporated (RAH) has been upgraded by TheStreet Ratings from hold to buy. 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. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
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 33.66%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, RAH should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- Net operating cash flow has significantly increased by 844.52% to $137.90 million when compared to the same quarter last year. In addition, RALCORP HOLDINGS INC has also vastly surpassed the industry average cash flow growth rate of 340.10%.
- RALCORP HOLDINGS INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, RALCORP HOLDINGS INC swung to a loss, reporting -$3.44 versus $3.74 in the prior year. This year, the market expects an improvement in earnings ($5.90 versus -$3.44).
- RAH's debt-to-equity ratio of 0.88 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that RAH's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.70 is low and demonstrates weak liquidity.
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 $4.68 billion and is part of the consumer goods sector and food & beverage industry. Shares are up 33.4% year to date as of the close of trading on Friday.You can view the full Ralcorp Ratings Report or get investment ideas from our investment research center.