NEW YORK ( TheStreet) -- Winn-Dixie Stores (Nasdaq: WINN) 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, disappointing return on equity, poor profit margins, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share. 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 & Staples Retailing industry. The net income has significantly decreased by 47.8% when compared to the same quarter one year ago, falling from $13.98 million to $7.30 million.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Food & Staples Retailing industry and the overall market, WINN-DIXIE STORES INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for WINN-DIXIE STORES INC is currently lower than what is desirable, coming in at 29.40%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.50% trails that of the industry average.
- The share price of WINN-DIXIE STORES INC has not done very well: it is down 19.27% 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. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- WINN-DIXIE STORES INC 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, WINN-DIXIE STORES INC swung to a loss, reporting -$0.54 versus $0.67 in the prior year. This year, the market expects an improvement in earnings (-$0.17 versus -$0.54).