Editor's Note: 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
NEW YORK (
-- Seneca Foods
) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and poor profit margins.
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Highlights from the ratings report include:
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
- SENECA FOODS CORP 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. During the past fiscal year, SENECA FOODS CORP increased its bottom line by earning $3.56 versus $0.92 in the prior year.
- The debt-to-equity ratio is somewhat low, currently at 0.74, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that SENEA's debt-to-equity ratio is low, the quick ratio, which is currently 0.59, displays a potential problem in covering short-term cash needs.
- The gross profit margin for SENECA FOODS CORP is currently extremely low, coming in at 11.60%. Regardless of SENEA's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 1.42% trails the industry average.
- Net operating cash flow has significantly decreased to $31.59 million or 64.85% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
Seneca Foods Corporation produces and distributes processed fruits and vegetables. The company has a P/E ratio of 8.5, below the S&P 500 P/E ratio of 17.7. Seneca has a market cap of $265.6 million and is part of the consumer goods sector and food & beverage industry. Shares are up 2% year to date as of the close of trading on Monday.
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-- Written by a member of TheStreet Ratings Staff
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