NEW YORK ( TheStreet) -- Alico (Nasdaq: ALCO) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and poor profit margins. Highlights from the ratings report include:
- ALCO's very impressive revenue growth greatly exceeded the industry average of 24.9%. Since the same quarter one year prior, revenues leaped by 57.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
- ALICO INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. During the past fiscal year, ALICO INC turned its bottom line around by earning $0.97 versus -$0.09 in the prior year.
- Despite currently having a low debt-to-equity ratio of 0.55, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.97 is weak.
- The gross profit margin for ALICO INC is currently lower than what is desirable, coming in at 28.50%. Regardless of ALCO'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 7.40% trails the industry average.
- ALCO has underperformed the S&P 500 Index, declining 13.52% from its price level of one year ago. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
-- Written by a member of TheStreet Ratings Staff