NEW YORK ( TheStreet) -- Overhill Farms (AMEX: OFI) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and poor profit margins. Highlights from the ratings report include:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Food Products industry. The net income has significantly decreased by 35.5% when compared to the same quarter one year ago, falling from $2.36 million to $1.52 million.
- OVERHILL FARMS INC's earnings per share declined by 40.0% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. During the past fiscal year, OVERHILL FARMS INC reported lower earnings of $0.48 versus $0.52 in the prior year.
- The revenue fell significantly faster than the industry average of 132.8%. Since the same quarter one year prior, revenues fell by 19.6%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- OFI's debt-to-equity ratio is very low at 0.18 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, OFI has a quick ratio of 1.50, which demonstrates the ability of the company to cover short-term liquidity needs.