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"We rate LEADING BRANDS INC (LBIX) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself, deteriorating net income, disappointing return on equity and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The share price of LEADING BRANDS INC has not done very well: it is down 14.64% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Beverages industry. The net income has significantly decreased by 182.1% when compared to the same quarter one year ago, falling from $0.10 million to -$0.08 million.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Beverages industry and the overall market, LEADING BRANDS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to -$0.01 million or 102.31% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- 39.17% is the gross profit margin for LEADING BRANDS INC which we consider to be strong. Regardless of LBIX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, LBIX's net profit margin of -2.73% significantly underperformed when compared to the industry average.
- You can view the full analysis from the report here: LBIX Ratings Report
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