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Delhaize Group SA Stock Downgraded (DEG)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- Delhaize Group (NYSE: DEG) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

  • EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 3.5%. Since the same quarter one year prior, revenues rose by 23.6%. 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.
  • Net operating cash flow has significantly increased by 103.07% to $799.83 million when compared to the same quarter last year. In addition, DELHAIZE GROUP - ETS DLHZ FR has also vastly surpassed the industry average cash flow growth rate of -13.19%.
  • The gross profit margin for DELHAIZE GROUP - ETS DLHZ FR is currently lower than what is desirable, coming in at 27.60%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -2.59% trails 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 & Staples Retailing industry. The net income has significantly decreased by 292.3% when compared to the same quarter one year ago, falling from $110.54 million to -$212.52 million.
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Etablissements Delhaize Freres et Cie 'Le Lion' (Groupe Delhaize) Societe Anonyme, together with its subsidiaries, operates food supermarkets. It also operates other store formats, such as convenience and proximity stores, specialty stores, and discount supermarkets. The company has a P/E ratio of 8.8, below the S&P 500 P/E ratio of 17.7. Delhaize Group has a market cap of $5.39 billion and is part of the services sector and retail industry. Shares are up 35.7% year to date as of the close of trading on Thursday.

You can view the full Delhaize Group Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

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