NEW YORK ( TheStreet) -- Dean Foods Company (NYSE: DF) 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:
  • 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 212.8% when compared to the same quarter one year ago, falling from $44.79 million to -$50.51 million.
  • The debt-to-equity ratio is very high at 2.52 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, DF maintains a poor quick ratio of 0.73, which illustrates the inability to avoid short-term cash problems.
  • 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 Food Products industry and the overall market on the basis of return on equity, DEAN FOODS CO underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • The gross profit margin for DEAN FOODS CO is currently lower than what is desirable, coming in at 25.10%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -1.50% is significantly below that of the industry average.
  • Net operating cash flow has decreased to $142.47 million or 17.82% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

Dean Foods Company, together with its subsidiaries, operates as a food and beverage company in the United States. It operates in two segments, Fresh Dairy Direct-Morningstar and WhiteWave-Alpro. Dean has a market cap of $1.5 billion and is part of the consumer goods sector and food & beverage industry. Shares are down 8.9% year to date as of the close of trading on Friday.

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