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 increase in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.
Highlights from the ratings report include:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Food Products industry. The net income increased by 66.8% when compared to the same quarter one year prior, rising from $21.10 million to $35.20 million.
- FDP's revenue growth trails the industry average of 17.9%. Since the same quarter one year prior, revenues slightly increased by 4.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- FDP's debt-to-equity ratio is very low at 0.05 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.04, which illustrates the ability to avoid short-term cash problems.
- 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. Although other factors naturally played a role, the company's strong earnings growth was key. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
Fresh Del Monte Produce Inc., through its subsidiaries, produces, transports, sources, markets, and distributes fresh and fresh-cut fruit and vegetables worldwide. It also offers prepared fruit and vegetables, juices, beverages, snacks, and poultry and meat products. The company has a P/E ratio of 15.5, above the average food & beverage industry P/E ratio of 15.4 and below the S&P 500 P/E ratio of 17.7. Fresh Del Monte Produce has a market cap of $1.5 billion and is part of the
industry. Shares are up 7.1% year to date as of the close of trading on Friday.
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