NEW YORK (TheStreet) -- Shares of The Fresh Market Inc. (TFM - Get Report) are lower by -5.56% to $30.85 in pre-market trading today following a ratings downgrade to "sell" from "neutral" at Goldman Sachs (GS - Get Report).
The firm said it reduced its rating on the specialty non-perishable food retailer due to an increase in competition and the cost inflation the company is facing.
Goldman cut its price target on the stock to $27 from $36.
Separately, TheStreet Ratings team rates FRESH MARKET INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate FRESH MARKET INC (TFM) 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, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and premium valuation."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 5.0%. Since the same quarter one year prior, revenues rose by 17.6%. 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 increased to $56.17 million or 22.37% when compared to the same quarter last year. In addition, FRESH MARKET INC has also modestly surpassed the industry average cash flow growth rate of 12.44%.
- TFM's debt-to-equity ratio is very low at 0.12 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.24 is very weak and demonstrates a lack of ability to pay short-term obligations.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Food & Staples Retailing industry. The net income has significantly decreased by 25.1% when compared to the same quarter one year ago, falling from $22.12 million to $16.57 million.
- You can view the full analysis from the report here: TFM Ratings Report