NEW YORK (
) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.
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Highlights from the ratings report include:
- Despite its growing revenue, the company underperformed as compared with the industry average of 8.2%. Since the same quarter one year prior, revenues slightly increased by 0.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The current debt-to-equity ratio, 0.51, is low and is below the industry average, implying that there has been successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.36 is very weak and demonstrates a lack of ability to pay short-term obligations.
- The gross profit margin for SPARTAN STORES INC is rather low; currently it is at 20.20%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.00% trails that of the industry average.
- Net operating cash flow has significantly decreased to -$19.25 million or 395.09% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
Spartan Stores, Inc. operates as a grocery distributor and retailer principally in Michigan and Indiana. The company operates in two segments, Distribution and Retail. The company has a P/E ratio of 11, equal to the average wholesale industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Spartan Stores has a market cap of $333.3 million and is part of the
industry. Shares are down 16.4% year to date as of the close of trading on Monday.
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-- Written by a member of TheStreet Ratings Staff
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.