The firm said it lowered its price target on the retail food company based on estimate cuts and company's timing of new store openings for fiscal 2016, which are being pushed into fiscal 2017.
Jefferies reiterated its "buy" rating on the stock.
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Separately, TheStreet Ratings team rates FAIRWAY GROUP HOLDINGS as a Sell with a ratings score of E+. TheStreet Ratings Team has this to say about their recommendation:
"We rate FAIRWAY GROUP HOLDINGS (FWM) a SELL. This is based on the dominance of unfavorable investment measures, which should drive this stock to significantly underperform the majority of stocks that we rate. The company's weaknesses can be seen in multiple areas, such as its poor profit margins and generally high debt management risk."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The gross profit margin for FAIRWAY GROUP HOLDINGS is currently lower than what is desirable, coming in at 31.90%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -15.19% is significantly below that of the industry average.
- The debt-to-equity ratio is very high at 14.97 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, FWM's quick ratio is somewhat strong at 1.05, demonstrating the ability to handle short-term liquidity needs.
- Compared to other companies in the Food & Staples Retailing industry and the overall market, FAIRWAY GROUP HOLDINGS's return on equity significantly trails that of both the industry average and the S&P 500.
- FWM's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 72.10%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter.
- FAIRWAY GROUP HOLDINGS has improved earnings per share by 31.5% in the most recent quarter compared to the same quarter a year ago. This year, the market expects an improvement in earnings (-$0.42 versus -$1.43).
- You can view the full analysis from the report here: FWM Ratings Report
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.