NEW YORK (
) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
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Highlights from the ratings report include:
- VCO's revenue growth has slightly outpaced the industry average of 1.1%. Since the same quarter one year prior, revenues slightly increased by 9.2%. 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.
- The current debt-to-equity ratio, 0.41, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.80 is somewhat weak and could be cause for future problems.
- VINA CONCHA Y TORO SA's earnings per share declined by 19.4% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, VINA CONCHA Y TORO SA increased its bottom line by earning $2.61 versus $2.43 in the prior year. For the next year, the market is expecting a contraction of 28.4% in earnings ($1.87 versus $2.61).
- Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, VCO has underperformed the S&P 500 Index, declining 21.65% from its price level of one year ago. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it is one of the factors that makes this stock an attractive investment.
Vina Concha y Toro S.A., together with its subsidiaries, produces and markets wine products. The company has a P/E ratio of 16.2, above the average food & beverage industry P/E ratio of 14.5 and below the S&P 500 P/E ratio of 17.7. Concha y Toro Winery has a market cap of $1.42 billion and is part of the
industry. Shares are up 1.9% year to date as of the close of trading on Tuesday.
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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.