NEW YORK (
-- Smart Balance
) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and a generally disappointing performance in the stock itself.
Highlights from the ratings report include:
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Food Products industry and the overall market, SMART BALANCE INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has decreased to $4.58 million or 43.42% when compared to the same quarter last year. Despite a decrease in cash flow SMART BALANCE INC is still fairing well by exceeding its industry average cash flow growth rate of -92.07%.
- The gross profit margin for SMART BALANCE INC is rather high; currently it is at 50.10%. Regardless of SMBL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SMBL's net profit margin of 5.90% is significantly lower than the same period one year prior.
- SMBL's debt-to-equity ratio is very low at 0.16 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.70 is somewhat weak and could be cause for future problems.
- SMART BALANCE INC has improved earnings per share by 20.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SMART BALANCE INC swung to a loss, reporting -$2.04 versus $0.06 in the prior year. This year, the market expects an improvement in earnings ($0.22 versus -$2.04).
Smart Balance, Inc. distributes various food products in the United States and internationally. The company offers its products under the Smart Balance and Earth Balance trademarks. Smart Balance has a market cap of $314.7 million and is part of the
industry. Shares are up 18.7% year to date as of the close of trading on Monday.
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