NEW YORK ( TheStreet) -- Gruma SAB de CV (NYSE: GMK) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth and notable return on equity. However, as a counter to these strengths, we find that the company's profit margins have been poor overall. Highlights from the ratings report include:
- The gross profit margin for GRUMA SAB DE CV is currently lower than what is desirable, coming in at 33.20%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.30% significantly trails the industry average.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Food Products industry average, but is greater than that of the S&P 500. The net income increased by 218.7% when compared to the same quarter one year prior, rising from -$12.50 million to $14.83 million.
- GRUMA SAB DE CV reported significant earnings per share improvement 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, GRUMA SAB DE CV reported lower earnings of $0.31 versus $0.84 in the prior year. This year, the market expects an improvement in earnings ($1.67 versus $0.31).
- The revenue growth significantly trails the industry average of 129.6%. Since the same quarter one year prior, revenues rose by 29.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Powered by its strong earnings growth of 211.11% and other important driving factors, this stock has surged by 45.02% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.