NEW YORK ( TheStreet) -- Seneca Foods Corp (Nasdaq: SENEA) 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 and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity. Highlights from the ratings report include:
- The revenue growth significantly trails the industry average of 125.9%. Since the same quarter one year prior, revenues rose by 17.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has increased to $31.40 million or 19.89% when compared to the same quarter last year. Despite an increase in cash flow, SENECA FOODS CORP's cash flow growth rate is still lower than the industry average growth rate of 64.50%.
- SENECA FOODS CORP has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, SENECA FOODS CORP reported lower earnings of $1.45 versus $3.96 in the prior year. This year, the market expects an improvement in earnings ($1.54 versus $1.45).
- 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 251.2% when compared to the same quarter one year ago, falling from $5.28 million to -$7.98 million.
- The share price of SENECA FOODS CORP has not done very well: it is down 20.41% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.