NEW YORK ( TheStreet) -- MGP Ingredients (Nasdaq: MGPI) 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, weak operating cash flow, 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 Beverages industry. The net income has significantly decreased by 514.3% when compared to the same quarter one year ago, falling from $2.48 million to -$10.26 million.
  • 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 Beverages industry and the overall market, MGP INGREDIENTS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to $4.85 million or 53.78% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 41.06%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 514.28% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • MGP INGREDIENTS 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 year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, MGP INGREDIENTS INC swung to a loss, reporting -$0.08 versus $0.50 in the prior year. This year, the market expects an improvement in earnings ($0.68 versus -$0.08).

MGP Ingredients, Inc. produces and sells distillery and ingredients products in the United States, Japan, Canada, Europe, and internationally. It processes corn and wheat flour into various products through an integrated production process. MGP Ingredients has a market cap of $92.2 million and is part of the consumer goods sector and food & beverage industry. Shares are down 50.5% year to date as of the close of trading on Monday.

You can view the full MGP Ingredients Ratings Report or get investment ideas from our investment research center.
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MGP Ingredients (MGPI) Downgraded From Buy to Hold