Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified

Pinnacle Foods

(

PF

) as a pre-market laggard candidate. In addition to specific proprietary factors, Trade-Ideas identified Pinnacle Foods as such a stock due to the following factors:

  • PF has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $173.8 million.
  • PF traded 206,683 shares today in the pre-market hours as of 7:40 AM.
  • PF is down 7% today from yesterday's close.

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More details on PF:

Pinnacle Foods Inc., through its subsidiaries, manufactures, markets, and distributes branded convenience food products in North America. It operates through three segments: Birds Eye Frozen, Duncan Hines Grocery, and Specialty Foods. The stock currently has a dividend yield of 2.5%. PF has a PE ratio of 38.8. Currently there are 2 analysts that rate Pinnacle Foods a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Pinnacle Foods has been 1.2 million shares per day over the past 30 days. Pinnacle has a market cap of $4.0 billion and is part of the consumer goods sector and food & beverage industry. Shares are up 24.4% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Pinnacle Foods as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, generally higher debt management risk and poor profit margins.

Highlights from the ratings report include:

  • PF's revenue growth has slightly outpaced the industry average of 3.2%. Since the same quarter one year prior, revenues slightly increased by 5.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • PINNACLE FOODS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, PINNACLE FOODS INC increased its bottom line by earning $0.77 versus $0.47 in the prior year. This year, the market expects an improvement in earnings ($1.74 versus $0.77).
  • Powered by its strong earnings growth of 59.09% and other important driving factors, this stock has surged by 37.50% over the past year, outperforming the rise in the S&P 500 Index during the same period. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
  • Currently the debt-to-equity ratio of 1.55 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Even though the debt-to-equity ratio is weak, PF's quick ratio is somewhat strong at 1.01, demonstrating the ability to handle short-term liquidity needs.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Food Products industry and the overall market, PINNACLE FOODS INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.

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