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 revenue growth, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. 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:
- CBOU's revenue growth has slightly outpaced the industry average of 8.7%. Since the same quarter one year prior, revenues rose by 11.4%. 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.
- CBOU has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, CBOU has a quick ratio of 1.81, which demonstrates the ability of the company to cover short-term liquidity needs.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- The gross profit margin for CARIBOU COFFEE CO is rather low; currently it is at 15.40%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.50% significantly trails the industry average.
- Net operating cash flow has significantly decreased to -$0.65 million or 119.51% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
Caribou Coffee Company, Inc. owns and operates coffeehouses. The company operates in three segments: Retail, Commercial, and Franchise. The Retail segment offers premium coffee and espresso-based beverages, food, specialty teas, whole bean coffee, branded merchandise, and related products. The company has a P/E ratio of 20.5, above the average leisure industry P/E ratio of 20.2 and above the S&P 500 P/E ratio of 17.7. Caribou Coffee has a market cap of $251.1 million and is part of the
industry. Shares are down 15.7% year to date as of the close of trading on Monday.
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-- Written by a member of TheStreet Ratings Staff
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.