NEW YORK ( TheStreet) -- Alliance One International (NYSE: AOI) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally weak debt management, disappointing return on equity, poor profit margins and weak operating cash flow.

Highlights from the ratings report include:
  • Net operating cash flow has significantly decreased to -$87.07 million or 160.65% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The gross profit margin for ALLIANCE ONE INTL INC is currently extremely low, coming in at 14.30%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -19.90% is significantly below that of the industry average.
  • 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 Tobacco industry and the overall market, ALLIANCE ONE INTL INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The debt-to-equity ratio is very high at 3.57 and currently higher than the industry average, implying that there is very poor management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, AOI maintains a poor quick ratio of 0.84, which illustrates the inability to avoid short-term cash problems.
  • 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 Tobacco industry. The net income has significantly decreased by 648.8% when compared to the same quarter one year ago, falling from $18.89 million to -$103.66 million.

Alliance One International, Inc. engages in purchasing, processing, storing, and selling leaf tobacco to cigarette manufacturers and other consumer tobacco products worldwide. The company primarily involves in the processing and sale of flue-cured, burley, and oriental tobaccos. The company has a P/E ratio of seven, below the average tobacco industry P/E ratio of 7.3 and below the S&P 500 P/E ratio of 17.7. Alliance One International has a market cap of $306.5 million and is part of the consumer goods sector and tobacco industry. Shares are down 25.9% year to date as of the close of trading on Tuesday.

You can view the full Alliance One International Ratings Report or get investment ideas from our investment research center.
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