NEW YORK ( TheStreet) -- Seneca Foods (Nasdaq: SENEA) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and increase in net income. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity. Highlights from the ratings report include:
- SENEA's revenue growth trails the industry average of 23.6%. Since the same quarter one year prior, revenues slightly increased by 3.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- After a year of stock price fluctuations, the net result is that SENEA's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- The company, on the basis of net income growth from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Food Products industry average. The net income increased by 2.6% when compared to the same quarter one year prior, going from $2.81 million to $2.88 million.
- The gross profit margin for SENECA FOODS CORP is currently extremely low, coming in at 9.50%. Regardless of SENEA's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 1.00% trails the industry average.
- SENECA FOODS CORP's earnings per share improvement from the most recent quarter was slightly positive. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings 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. For the next year, the market is expecting a contraction of 37.9% in earnings ($0.90 versus $1.45).