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:
- The revenue growth greatly exceeded the industry average of 24.8%. Since the same quarter one year prior, revenues rose by 48.3%. 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.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Food Products industry and the overall market on the basis of return on equity, ALICO INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- The gross profit margin for ALICO INC is currently lower than what is desirable, coming in at 30.50%. 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, ALCO's net profit margin of 13.70% compares favorably to the industry average.
- ALCO is off 5.35% from its price level of one year ago, reflecting the general market trend and ignoring their higher earnings per share compared to the year-earlier quarter. 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