NEW YORK (
) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we also find weaknesses including poor profit margins and a generally disappointing performance in the stock itself.
Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 24.3%. Since the same quarter one year prior, revenues rose by 15.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Although ALN's debt-to-equity ratio of 0.22 is very low, it is currently higher than that of the industry average. To add to this, ALN has a quick ratio of 2.48, which demonstrates the ability of the company to cover short-term liquidity needs.
- AMERICAN LORAIN CORP has improved earnings per share by 25.0% in the most recent quarter compared to the same quarter a year ago. Stable Earnings per share over the past two years indicate the company has sound management over its earnings and share float. During the past fiscal year, AMERICAN LORAIN CORP increased its bottom line by earning $0.57 versus $0.56 in the prior year.
- ALN's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 40.86%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- The gross profit margin for AMERICAN LORAIN CORP is rather low; currently it is at 22.90%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 12.70% is above that of the industry average.
American Lorain Corporation develops, manufactures, and sells various food products in China and internationally. The company has a P/E ratio of 2.3, above the average food & beverage industry P/E ratio of 2.1 and below the S&P 500 P/E ratio of 17.7. American Lorain has a market cap of $41.4 million and is part of the
industry. Shares are down 13.1% year to date as of the close of trading on Tuesday.
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-- Written by a member of TheStreet Ratings Staff